Image source: Shutterstock

Highlights:

  • MSI to cease operations following ongoing commercial losses and limited funding capacity.
  • The company’s subsidiary assets expected to be acquired by key supplier Super Link.
  • MSI to retain minimal net assets for statutory obligations and new business search.

Multistack International Limited (ASX:MSI) is an Australian-listed company primarily involved in the marketing and distribution of industrial HVAC equipment through its subsidiary, Multistack Australia Pty Ltd. The company also engages in the distribution of heat exchangers and Organic Rankine Cycle (ORC) technologies.

The company has announced that it will discontinue its existing operations following a strategic review that deemed its core business activities commercially unsustainable. The company's primary subsidiary, Multistack Australia Pty Limited, currently manages MSI’s principal operations, which include the marketing of industrial air conditioning equipment in the Australian market, distribution of Multistack-branded water-cooled and air-cooled water chillers, promotion and distribution of Organic Rankine Cycle (ORC) technologies and products, and sales of heat exchangers and related systems.

Despite continued efforts to sustain its operations, MSI has faced persistent financial challenges. The business remains loss-making, and directors have assessed that any further continuation would require a substantial capital injection. Given current financial constraints, the Board has concluded that the company lacks the capacity to raise the capital needed to continue business in its present form.

In light of this, MSI has resolved to wind down its existing business model. As part of the resolution, the Board has identified Super Link Company Limited (Super Link), a key supplier and pre-existing commercial partner, as the only practical acquirer for the assets and liabilities of Multistack Australia.

Although a binding legal agreement is not yet in place, MSI and Super Link have reached an in-principle agreement for a transaction. This agreement would see Super Link acquire the entire Multistack Australia business, including all its assets and liabilities. The proposed transaction is also expected to include MSI’s other non-operating subsidiaries, with the exclusion of the listed entity itself, Multistack International Limited.

Given that MSI’s liabilities exceed its assets, the acquisition will likely be executed for nominal consideration. In exchange, Super Link is expected to forgive loans previously extended to MSI by Super Link and related entities. Following this, MSI would retain a small net asset position, represented by an agreed cash amount. This capital will be allocated toward meeting statutory obligations including compliance with ASX and corporate reporting requirements over the next 12 months.

During this period, MSI’s Board will seek new business opportunities to reposition the listed entity. The transaction will be contingent on several approvals, including execution of definitive legal documents, shareholder consent, and the completion of an independent expert’s report in accordance with the Corporations Act and ASX Listing Rules.