Lanka gives up on graphite and moves into gadgets in $17m bid to buy MSY

Tiny microcap Lanka Graphite — which had only $5000 in the bank at the end of June — is giving up on graphite and buying a bunch of computer retail stores.

Lanka Graphite plans to sell off its graphite tenements in Sri Lanka’s south-west and buy the MSY retail chain which operates 28 stores in six states selling PCs and gadgets.

MSY’s spartan stores and esoteric websites (see below) are well-known to computer geeks throughout Australia.

Lanka Graphite (ASX:LGR) made no money in the past year and burned about $889,000.

Lanka will pay the owners of MSY — which was founded in 1996 and is said to generate $100 million revenue per year — $17.5 million worth of shares at 0.5c each.

The stock last traded at 2.1c before it was suspended.

If the deal is approved by shareholders , Lanka will sell-off graphite exploration tenements in the south-west of Sri Lanka and launch a $3 million capital raising priced at 0.5c.

Under the deal, Lanka will also borrow $1 million fom MSY — to be repaid in shares at 0.5c — for working capital and to fund the sales of its mining assets.