AMI Equipment Sold for US$4M, Merchant House Books A$9.02M Loss
Merchant House International Limited has sold equipment from its shuttered American Merchant Inc textile factory for US$4 million, crystallising a significant A$9.02 million loss. The company continues to seek buyers for the remaining land and buildings.
- AMI textile factory equipment sold for US$4 million
- Sale results in A$9.02 million loss against book value
- US$1 million received upfront, US$3 million via promissory notes
- No director conflicts with buyers United Textile Machinery Corp and Gibbs International Inc
- Company still pursuing sale of AMI land and buildings
Background on AMI Factory Closure
Merchant House International Limited (ASX: MHI) announced the cessation of operations at its American Merchant Inc (AMI) textile factory in August 2024. This marked a significant turning point for the company, which had been seeking to divest assets related to the now-defunct manufacturing site.
Following the closure, Merchant House committed to selling the land, buildings, and equipment associated with AMI to recoup value and reduce ongoing costs.
Details of the Equipment Sale
On 10 February 2025, the company revealed it had entered into an agreement to sell the factory equipment for US$4 million to two US-based buyers: United Textile Machinery Corp (Massachusetts) and Gibbs International Inc (South Carolina). The transaction terms included an immediate payment of US$1 million, already received, with the remaining US$3 million structured as promissory notes payable over the next 60 days.
Importantly, the company confirmed no conflicts of interest exist between the directors and the purchasers, underscoring the arm’s-length nature of the deal.
Financial Impact and Loss Recognition
The equipment had a book carrying value of A$15.47 million, but the sale price translates to approximately A$6.45 million, resulting in a substantial loss on sale of A$9.02 million. This sizeable write-down reflects the challenging market conditions for textile manufacturing assets and the urgency to liquidate.
Such a loss will weigh on Merchant House’s financial statements for the current reporting period, potentially impacting investor sentiment and share price performance.
Next Steps: Land and Buildings Sale
While the equipment sale is complete, Merchant House continues to seek buyers for the land and buildings of the AMI site. The outcome of these efforts remains uncertain but will be critical for the company’s ongoing asset rationalisation strategy.
Investors will be watching closely for updates on these negotiations, as further disposals could materially affect the company’s balance sheet and liquidity position.
Strategic Implications
This asset sale marks a painful but necessary step in Merchant House’s restructuring following the AMI factory closure. The significant loss underscores the difficulties in realising value from specialised manufacturing assets in a competitive global environment.
Looking ahead, the company’s ability to efficiently divest remaining assets and stabilise its financial footing will be key to restoring investor confidence and positioning for future growth opportunities.
Bottom Line?
Merchant House’s heavy loss on AMI equipment sale signals tough times ahead as it hunts for buyers of remaining assets.
Questions in the middle?
- What price can Merchant House realistically expect for the AMI land and buildings?
- How will the A$9 million loss affect Merchant House’s upcoming earnings report and cash flow?
- Could further asset disposals trigger strategic shifts or capital raises for the company?
