Daka Designs Limited
Daka Designs Limited, a Hong Kong-based designer and developer of consumer lifestyle products, with annual revenues of approximately $35 million, serves customers in more than 50 countries worldwide. In September 2005, the company issued a profit warning one year after its IPO. By January 2006, the Singapore Stock Exchange ("SGX") halted trade and suspended Daka shares after initiating an investigation into accounting irregularities.
Alvarez & Marsal assumed the roles of Chief Executive Officer, Operations Manager and Restructuring Advisor. A&M managed relationships with stakeholders, including suppliers, customers and banks during the crisis period, and worked with SGX, which led to the restatement of prior year accounts. As a result of A&M's involvement, Daka doubled capacities of key products and increased sales by 70 percent. Other notable outcomes included: stabilizing cash flow and operations, which increased available cash from HK $4 million to HK $26 million; rationalizing the company's product portfolio; streamlining costs and reducing operating expenses by more than 20 percent. In April 2007, Daka entered into a Sale and Purchase Agreement as an exit for minority shareholders, with recovery estimated at a more than 40 percent premium to last net tangible asset. The company is in the process of a reverse takeover of the listed shell. The recovery to minority shareholders is estimated at a more than 100 percent premium to the company's trading price prior to suspension.
