Kresta bidder wants to lift production
The Chinese entrepreneur offering to buy out other shareholders in Kresta Holdings made the move after its board frustrated his plans to expand the business in Australia and cut better supply deals.
_WestBusiness _ understands that the Kresta board rejected a proposal by managing director Xianfeng Lu to establish an assembly plant in the Eastern States.
Mr Lu launched the $27 million takeover bid also with the intention of freeing the Malaga-based window furnishings company from supplier arrangements which allegedly favoured other major shareholders.
His company Ningbo Xianfeng New Material, which trades as APLUS, intends to offer Kresta investors 23� a share once APLUS shareholders and Chinese authorities back the deal.
APLUS already holds a 20 per cent stake in Kresta. Mr Lu is understood to not want full ownership but wants to clean up the register to eliminate conflicts.
Taiwanese manufacturer Si Chuan Cheou has already sold most of its stock, while the representative of 19 per cent shareholder Fiesta Design quit the board last week.
Mr Lu is said to prefer keeping Kresta listed so he could use cash and scrip to acquire other businesses in Australia.
Kresta representatives have moved to hose down fears that Chinese ownership would see manufacturing moved offshore, saying the managing director wanted to strengthen domestic production.
"Since APLUS has been involved, all the communication they've been making is about a firm commitment to Australian manufacturing," chief financial officer Brendan Cocks said.
Chairman Rick Taylor said Mr Lu has "fantastic" connections in China which enabled him to source quality materials at lower prices.
"It's not a play where he's stuffing our manufacturing pipeline with his goods," Mr Taylor said.
The board would not be making a recommendation on the APLUS offer until it was formalised.
Kresta shares rose 3.5¢ to 20¢ yesterday.
It has also emerged that five Kresta executives recently bought 4 million Kresta shares from ousted chief executive Jules di Bartolomeo for around 17¢ each.
