- June 26, 2008
- Posted by: admin
- Category: Clothing and Textiles
e.tv owner Hosken Consolidated Investments (HCI) is expected to take control of Seardel from chief executive and founder Aaron Searll, after he relented to pressure and agreed to restructure the struggling clothing manufacturer.
Searll said yesterday that he expected new shareholder HCI to end up with a 51 percent stake in the country’s largest clothing and textile maker, following a rights offer of R300 million, which was announced yesterday, to strengthen the balance sheet.
It is understood from a source close to the deal that it would cost HCI between R250 million and R300 million for a 51 percent stake.
But the rand value and the percentage could vary, depending on how many existing shareholders chose to follow their rights.
Searll expected to retain a stake of about 30 percent and step down from executive management to become chairman, after 40 years at the helm of Seardel as a listed company.
Searll, who in recent years has become a controversial owner, will be replaced by respected Seardel divisional manager Walter Simeoni, the managing director of Frame Textile.
An analyst who asked not to be named said Seardel had underperformed, despite the pressure from cheap Chinese clothing imports.
Searll had squandered cash at the head office level and underinvested in its competent manufacturing divisions, said the analyst.
In the six months to December, Seardel made net profit of R2.6 million on turnover of R2 billion.
The analyst said incoming chief executive Simeoni was one of the best manufacturing managers in the country, and with the removal of Searll, the cash injection and the instilling of financial efficiency, there was big value to be unlocked.
Searll said that at present he had “60-odd percent” of the voting or ordinary shares in the company.
The controversial two sets of shares, voting and economic, would be collapsed to create ordinary shares of equal value to all shareholders.
Earlier this year Business Report speculated that the company was ripe for asset stripping after its shares traded at a discount to its net asset value per share.
Source: Business Report – Tom Robbins