RONKONKOMA, N.Y., June 25, 2015 /PRNewswire/ -- Lakeland
Industries, Inc. (the "Company") (NASDAQ: LAKE), a leading global
manufacturer of industrial protective clothing for industry,
municipalities, healthcare and to first responders on the federal,
state and local levels, today announced that it has signed a
definitive agreement to exit its Brazilian operations through a
transfer of shares of its wholly-owned Brazilian subsidiary
("Lakeland Brazil") to a company owned by a current manager of the
subsidiary. The shares transfer and related details to finalize the
Company's exit from Brazil are
expected to be completed on or around July
31, 2015.
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In exchange for receiving the shares entitling full ownership of
Lakeland Brazil, the new owner will assume all liabilities and
obligations of Lakeland Brazil, whether arising prior to, on or
after the closing date of the shares transfer. In contemplation of
the shares transfer, the Company has provided US $717,000 to Lakeland Brazil in the form of a
capital raise and has agreed to provide an additional approximate
US $508,000 through September 1, 2015 to support certain operational
costs of Lakeland Brazil. In addition, the Company has agreed to
provide partial funding in respect of certain labor court case
reimbursements over the next two years. The Company believes
the transfer of Lakeland Brazil and its commitment to contingency
coverage relating to labor court claims over the next two years
will be more than offset by the anticipated U.S. tax benefit of
approximately US $9.5 million to be
gained through a worthless stock deduction for Brazil that the Company will claim. The
closing of the transaction announced today is subject to several
conditions precedent, including the transfer by Lakeland Brazil of
its Brazilian land ownership to the Company. The Company's exposure
to certain liabilities arising in connection with the prior
operations of Lakeland Brazil and the Company's claiming of the tax
deduction is more fully disclosed in the Company's filings with the
Securities and Exchange Commission (Form 8-K). While management is
still analyzing the transaction management believes there will not
be a material adverse change to stockholders equity as a result of
recording this transaction.
Christopher J. Ryan, President
and Chief Executive Officer of Lakeland Industries, commented, "The
agreement announced today represents a significant milestone in the
Company's strategy to exit from Brazil. For nearly three years we have
expended considerable resources in terms of personnel and time
working toward reducing or eliminating Lakeland Brazil's negative
contributions to our consolidated results while working on this
exit strategy. We are very pleased to have arrived at this
point of our strategic efforts in a position to unlock a seemingly
unrecognized value in the form of a tax benefit while significantly
removing risks and uncertainties. As we have stated, our exit from
Brazil will enable us to focus on
improving our growth, profitability and cash flow generation in
other markets and areas of the business which hold greater promise
for Lakeland."
About Lakeland Industries, Inc.:
Lakeland Industries, Inc. (NASDAQ: LAKE) manufactures and sells
a comprehensive line of safety garments and accessories for the
industrial protective clothing market. The Company's products
are sold by a direct sales force and through independent sales
representatives to a network of over 1,000 safety and mill supply
distributors. These distributors in turn supply end user industrial
customers such as chemical/petrochemical, automobile, steel, glass,
construction, smelting, janitorial, pharmaceutical and high
technology electronics manufacturers, as well as hospitals and
laboratories. In addition, Lakeland supplies federal, state, and
local government agencies, fire and police departments, airport
crash rescue units, the Department of Defense, the Centers for
Disease Control and Prevention, and many other federal and state
agencies. For more information concerning Lakeland, please
visit the Company online at www.lakeland.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Forward-looking statements involve risks,
uncertainties and assumptions as described from time to time in
Press Releases and Forms 8-K, registration statements, quarterly
and annual reports and other reports and filings filed with the
Securities and Exchange Commission or made by management. All
statements, other than statements of historical facts, which
address Lakeland's expectations of sources or uses for capital or
which express the Company's expectation for the future with respect
to financial performance or operating strategies can be identified
as forward-looking statements. As a result, there can be no
assurance that Lakeland's future results will not be materially
different from those described herein as "believed," "projected,"
"planned," "intended," "anticipated," "estimated" or "expected," or
other words which reflect the current view of the Company with
respect to future events. We caution readers that these
forward-looking statements speak only as of the date hereof.
The Company hereby expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
such statements to reflect any change in the Company's expectations
or any change in events conditions or circumstances on which such
statement is based.
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SOURCE Lakeland Industries, Inc.