RNS Number:5696C
Dawson International PLC
03 September 2004
3 September 2004
Dawson International plc
Proposed Sale of the Joseph Dawson Business
Dawson International plc ("the Company") announces that it has conditionally
agreed to sell its Joseph Dawson fibre business ("the Joseph Dawson Business")
to Life Long Limited (to be re-named Joseph Dawson Limited following completion
of the sale) ("the Purchaser"), for a cash consideration of approximately #6.6
million ("the Sale"). The total consideration will be finally determined by
reference to the net asset value of stock and debtors of the Joseph Dawson
Business at completion.
Information on the Joseph Dawson Business
The Joseph Dawson Business operates as a division of Dawson International
Trading Limited ("DITL"), a subsidiary of the Company. It procures and/or
processes cashmere fibre primarily from sources in Asia for sale to industrial
yarn and weaving customers worldwide. Its major markets are Italy, the United
Kingdom and Germany. It employs approximately 20 people, mainly based in
Kinross, Scotland. In the year ended 3 January 2004 the business being sold
made an unaudited loss before tax of #3.1 million and had unaudited net assets
of #7.6 million.
Historically the Joseph Dawson Business has also procured cashmere for sale to
Todd & Duncan, the yarn spinning division of DITL. This part of the business is
excluded from the sale, as the Todd & Duncan division will now procure cashmere
on its own behalf. Five employees from the Joseph Dawson Business will transfer
to Todd & Duncan as a result.
Reasons for the Sale
The Company has identified the disposal of the Joseph Dawson Business, which has
been loss making since 2001, as a component of its recovery strategy. Whilst
recent management actions have improved the underlying trading results, the
Directors of the Company consider that with today's competitive position, it is
unlikely that the Joseph Dawson Business will produce returns which meet the
marginal cost of its invested capital.
Use of net proceeds and benefits
The net proceeds of the Sale as detailed below would significantly reduce the
continuing Dawson International Group's net indebtedness. The Company would
then be in a position to consider the early repayment of certain of the
Company's zero coupon, convertible, secured redeemable loan stock 2009 ("Loan
Stock") and to further develop the continuing Dawson International Group's
activities.
Terms of the Sale
The total consideration for the Sale, before estimated fees and associated costs
of #0.5 million, is approximately #6.6 million in cash of which #0.1 million is
payable immediately and the balance payable on completion. The net assets being
disposed of are currently estimated at #7.2 million. As noted above, the total
consideration will be finally determined by reference to the net asset value of
stock and debtors of the Joseph Dawson Business at completion. Limited
warranties and covenants are given to the Purchaser by Dawson International
Trading Limited and Dawson International Holdings (UK) Limited (which are
subsidiaries of the Company) in respect of the Joseph Dawson Business.
The Purchaser will acquire certain fixed assets, the stock, and the substantial
majority of the debtors and creditors of the Joseph Dawson Business as at
completion. In addition, the Purchaser will acquire the Joseph Dawson name and
goodwill relative to the business. Arrangements have been made for Todd & Duncan
to source cashmere for the Joseph Dawson Business at the request of and as agent
for the Purchaser for an initial period of at least one year on the terms of a
buying agency agreement. There are also certain other transitional
arrangements.
Mr William Holdsworth, a shareholder in and managing director of the Purchaser,
will personally guarantee the discharge by the Joseph Dawson Business of certain
obligations assumed by the Purchaser.
Completion
Completion of the Sale is conditional, inter alia, upon Shareholders' approval
and satisfaction of certain conditions precedent to the Purchaser's financing
arrangements as at completion. A Circular (which will incorporate full details
of the proposed Sale and a notice of Extraordinary General Meeting) is presently
being prepared and will be published shortly.
Prospects for the Continuing Dawson International Group
The Directors believe that the Sale represents a further step in the
restructuring and the refinancing of the continuing Dawson International Group.
As announced on 15 June 2004, the Company is making progress in discussions
with a number of potential providers of senior debt facilities, with a view to
the early redemption of certain of the Loan Stock in accordance with its terms.
The Company hopes to make a further announcement in this regard in the near
future.
Following the Sale, the businesses within the continuing Dawson International
Group will principally comprise:
* Todd & Duncan a UK-based business spinning cashmere and blended
yarns, primarily for the European market;
* Barrie a UK-based knitwear manufacturer providing private
label and own branded knitwear; and
* Dawson Cashmere USA a US-based business sourcing, distributing and
marketing cashmere knitwear from China.
Following completion of the Sale, the Directors' operational focus will be the
market development, improved operational efficiencies and further reduction of
the cost base within the Continuing Dawson International Group with a view to
building shareholder value. The Directors are considering how to further develop
the scale of the Dawson International Group's activities, whilst cognisant of
the Dawson International Group's financing constraints.
For further information please contact:
David G Cooper Finance Director Tel: 01577 867000
Media enquiries:
Gordon Beattie Beattie Communications Tel: 07768 588 163
This information is provided by RNS
The company news service from the London Stock Exchange
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