Corporate: Skin Elements’ shares tumble after it scraps its deal to enter China
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Skin Elements (ASX: SKN) lost 45 per cent this morning after it announced a deal to enter China will not go ahead.
Back in March it announced Henan Huatou Health Management (HMMM) had agreed to distribute its products in China. HMMM would order $20m over three years and make a $2.4 million investment into the company.
Last night it announced the deal was off with the only given reason being the parties couldn’t agree on several matters. The two HHHM directors who joined Skin Elements’ board have resigned.
The cancellation came despite HMMM placing an initial order of $300,000 and a convertible loan note deposit of $200,000. HMMM agreed to pay the latter within 7 days.
Skin Elements acknowledged this was a setback and said it would seek to raise $1 million.
However it tried to argue it had a brighter future ahead in other markets. It revealed it was in negotiations with a major UK chemist chain, a US online retailer and skincare distributor in Europe.
The market saw things differently sending shares down 45 per cent. Shares had been as high as 5 cents in late April but have gradually declined since then.
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