23 Jul 2013

Rakon chairman buys company shares

9:35 am on 23 July 2013

The chairman of Rakon has been demonstrating his faith in the company's future by buying shares.

Bryan Mogridge has spent $68,500 on about 275,000 shares in the firm, a manufacturer of timing crystals used in electronic devices. He paid about 25 cents a share, the same price the shares closed at on Monday.

According to Rakon's annual report, Mr Mogridge already owned more than 1.2 million Rakon shares.

Rakon managing director Brent Robinson and his brother Darren had already spent more than $81,500 buying the company's shares.

The purchases follow Rakon's announcement on 5 July that it was selling most of its stake in its manufacturing facility in Chengdu, China to pay down debt and to return the company's cashflow back to positive territory.

As part of that transaction, Rakon wrote off $32 million from its investment in the factory to date.

Rakon's institutional investors had already lost patience with the company and had sold most of their shares.

Mr Mogridge says, however, that the shares are trading at a big discount and that he has faith in the company's future. He says they are selling for less than half the net asset value of the company.

Earlier this month, the New Zealand Shareholders' Association confirmed it had asked stock market operator NZX to investigate what it called an unusual price rise in Rakon shares just before the Chengdu announcement.