Textured Jersey Lanka (Private) Limited, whose majority shareholders are Pacific Textured Jersey Holdings Limited, a fully owned subsidiary of Pacific Textiles Holdings Limited of Hong Kong (Pacific Textiles), and Sri Lanka’s Brandix Lanka Limited (Brandix Lanka), launched its Initial Public Offering (IPO) yesterday, to raise funds for the expansion of production facilities and to purchase state-of-the-art machinery to increase its production scale and efficiency.
Bill Lam, Chief Executive Officer of Pacific Textiles and a director of Textured Jersey, said that the listing would enable Textured Jersey to take advantage of potential inorganic growth opportunities in knit fabric in both Sri Lanka and the South Asian region in the medium term.
“Volatility in cotton prices and regional currency appreciation are industry-wide headwinds, but we believe these challenges will facilitate industry consolidation in the longer term, and stronger players will continue to gain market share” he said.
The value stands at Rs 1.2 billion where the Company is issuing a 12.21% stake or 80,000,000 new shares at a price of Rs. 15/- per / share.
Textured Jersey is currently majority owned by Pacific Textiles, which owns 45.6% of the company, with 34.3% being held by Brandix Lanka and the balance 20.1% being held by 47 other shareholders. Post listing it is expected that 29.9% of Textured Jersey will be held with the public, with part of the dilution having already taken place via a pre-IPO placement in May 2011 and the balance through this P0 of new shares. The total transaction value is estimated to be approximately Rs 2.9 billion.
Both Pacific Textiles and Brandix Lanka completed a placement of a total of 116,000,000 shares, which amounts to 17.71% of the Company (post- IPO) to certain qualified investors before the IPO as a private sell down in May 2011. The consideration for the pre-IPO placement was Rs. 15/- per share, which is the same price as the IPO share price. Subsequent to the IPO, Pacific Textiles and Brandix Lanka will collectively hold 70.08% of the total issued shares of the Company.
Ashroff Omar, Chief Executive Officer of Brandix Lanka and a director of Textured Jersey, said that the listing was sought to provide Textured Jersey with a separate independent platform to raise funds from the capital markets to support its future growth aspirations. “Knit products are the fastest growing segment of the Sri Lankan apparel export market, which is growing strongly even after the end of the GSP+ concessions in August 2010, and Textured Jersey is the country’s pre-eminent producer of value- added knitted fabric” he added.
Textured Jersey is one of Sri Lanka’s most sophisticated production facilities, manufacturing knitted fabrics for the intimate apparel and sportswear industries. Specialising in the manufacture of high quality, weft –knitted and dyed stretch fabrics, Textured Jersey is a major supplier to apparel manufacturers throughout Asia and end-chain retailers. Amongst its largest clients are Victoria’s Secret, Marks & Spencer and Intimissimi. Infrastructure at the 650,000 sq. ft facility in Avissawella enables a capacity to knit, dye and finish up to 2.5 million meters of fabric a month. De9pite facing challenges in the form of rising cotton prices, high energy costs and loss of tariff concessions, Textured Jersey has delivered strong financial results during the past five years.
For the year ended 31st March 2011, the Company recorded a revenue of USD 83.2mn (Rs. 9,284.6mn) and a net profit after tax of USD 6.lmn (Rs. 684.7mn) which represented 15% and 23%YoY growth respectively. The Company has a strong financial track record, with five year revenue and net profit CAGRs of 25% and 21% respectively, during a period of multiple challenges for the apparel industry.
source - www.dailymirror.lk
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