Bagir Group Ltd Update on Strategic Partnership and Trading (7218C)
June 19 2019 - 2:00AM
UK Regulatory
TIDMBAGR
RNS Number : 7218C
Bagir Group Ltd
19 June 2019
19 June 2019
Bagir Group Ltd
("Bagir" or the "Company")
Update on Strategic Partnership and Current Trading
Bagir (AIM: BAGR), a designer, creator and provider of
innovative tailoring, announces with regard to Shandong Ruyi's
proposed $16.5 million investment to acquire a 53.7% shareholding
in Bagir, that the Company has agreed to a further extension of the
unconditional completion date to 31 March 2020.
Following discussions over the last few days in Beijing with
senior management from both companies, the Board has been persuaded
of Shandong Ruyi's intention to complete the transaction and
commitment to provide valuable operational support to the Company
on the run up to the extended completion date and as previously
agreed.
As announced on 13 February 2019, Shandong Ruyi committed to
provide suit jacket manufacturing equipment, with an estimated
market value of approximately $1.3 million, for exclusive and
indefinite use in Bagir's Ethiopian manufacturing facility, free of
landed costs, for nil consideration. During our conversations,
Shandong Ruyi have reconfirmed their commitment to deliver this
manufacturing equipment to the Company's Ethiopian manufacturing
site by the end of September 2019.
As previously announced, Shandong Ruyi granted an extension to
their usual credit payment terms on the acquisition of up to
500,000 meters of wool and wool blend fabrics at market value, of
which Bagir has purchased 300,000 metres so far with a value of
$2.9m. The extension to Shandong Ruyi's credit terms was previously
until 30 June 2019, which Shandong Ruyi has now extended until the
new completion date of 31 March 2020. This will enable Bagir to
acquire the remaining 200,000 metres of wool and wool blend fabrics
on advantageous credit terms.
The extension of the unconditional completion date to 31 March
2020 is conditional on Ruyi providing to Bagir all fabrics and the
manufacturing equipment by the end of September 2019.
Over the last 18 months the Company has received $3.3 million of
non-refundable payments from Shandong Ruyi.
Current Trading
Whilst trading conditions have remained challenging, the Company
has had a strong start to 2019 with sales in the five months ended
31 May 2019 of $27.0m (31 May 2018: $21.8m), with an order backlog
of $26.2m and another 3 months during which the Company can secure
orders for completion in the current year.
The Company's Ethiopian manufacturing site is stabilized and
producing 3,000 trousers per day and is on track to increase output
to 4,000 trousers per day by the end of 2019 through improving
operational efficiency.
In addition to the cost reductions achieved in 2018, the Company
is planning to make further reductions to the cost operational base
during H2 2019.
As a result, the Board believes that the Company has sufficient
resources to support its day-to-day activities and will continue to
act in order to secure its future business plans.
CEO Eran Itzhak, said:
"Following face to face conversations we have been convinced of
Ruyi's intentions which together with the valuable operational
support being provided a further and final extension was agreed.
The business is performing reasonably well in a tough market and
while we have a good pipeline of new and backlog orders to focus
the operating team on, there is no doubt this is a challenging
period for major retailers and manufacturers."
Enquiries:
Bagir Group Limited
Eran Itzhak, Chief Executive Officer
Dotan Levy, Chief Financial Officer
Tessa Laws, Non-Executive Chairman +44 (0) 20 7284 7133
N+1 Singer (Nominated Adviser & Broker)
Mark Taylor
James Moat +44 (0)20 7496 3000
Novella Communications (Financial PR)
Tim Robertson
Fergus Young +44 (0) 20 3151 7008
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END
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