Bagir Group Ltd Acquisition (0484W)
February 06 2017 - 2:00AM
UK Regulatory
TIDMBAGR
RNS Number : 0484W
Bagir Group Ltd
06 February 2017
6 February 2017
Bagir Group Limited
("Bagir" or the "Company")
Acquisition of remaining 50% share in Ethiopian manufacturing
site
Bagir (AIM: BAGR), a designer, creator and provider of
innovative tailoring, is pleased to announce the conditional
acquisition of the remaining 50% shareholding in Nazareth Garments
("NGSC"), the joint venture owner of its manufacturing site in
Nazareth, Ethiopia, for a total consideration of US$1.9 million
(the "Acquisition").
The shareholding is being acquired from Bagir's joint venture
partners, Mr. Kassaye Mekuria Mindesyil and his family, Mrs. Senait
Bekele Zewudu and Mr. Lamenew Mekuria Mindesyil together with other
members of their families who are minority shareholders (the
"Sellers"). Following completion of the Acquisition, Bagir will own
100% of the manufacturing site.
Eran Itzhak, Chief Executive Officer, commented, "The option to
acquire the remaining 50% in this site giving us total control is
timely as it coincides with the Company looking to expand
production significantly and we can see growing interest in the
site from our customer and prospective customer base as well as new
exciting opportunities. There is still some way to go but we are in
a good position to make Ethiopia a key cornerstone of our
business."
Background to the Acquisition
Bagir first acquired a 50% shareholding in NGSC in November 2014
and has since been focused on investing in and developing the site
by upgrading the machinery and infrastructure as well as
implementing its quality, know-how and social responsibility
standards, so that it is capable of servicing international
retailers. In late 2016, the site completed its first international
export order for H&M along with a trial order for Haggar
Clothing Co., the leader in men's smart trousers in the United
States.
As announced at the time of the Company's equity placing in
December 2016, the Company has identified a clear opportunity to
increase the scale and sophistication of this site in order to meet
future demand and the net proceeds of that placing are being used
to invest in further development of the Ethiopian operations.
Over the next five years, the Company intends to deploy its
expansion plan for NGSC. The first stage of the expansion plan will
include:
-- new set up costs for a currently unused production hall to
enable it to produce up to 3,000 trousers per day;
-- relocation of existing machinery from Bagir's samples
production line in order to establish a new production line of 200
jackets per day; and
-- upgrading the current local market production hall through
the purchase of new sewing equipment and general
infrastructure.
Following this the Company plans to increase its suit production
capacity at NGSC and create a garment park on site to include a raw
materials hub. The Directors consider that this will led to
potential efficiencies through vertical integration.
Ethiopia has strategic advantages in terms of its duty-free
export status for sales to the UK and US, low production and energy
costs and proximity to Europe. When this is combined with a
manufacturing site capable of consistently producing garments to
export standard, the Directors believe that this will become a
viable option from which international retailers will source
significant volumes Against this important backdrop, the Directors
are of the view that it is important for Bagir to secure 100%
ownership of NGSC at this time so as to ensure that going forward
decisions on investment and expansion will be under the sole
control of the Company.
For the financial year ended 31 December 2015, NGSC generated
revenues of US$1.38 million and a net profit after tax of
US$0.59m.
The Acquisition together with the planned investment in the
first stage of the expansion plan totalling approximately US$3m
will be funded by the net proceeds from the recent fundraising and
the Company's asset backed financial headroom. The consideration
for the Acquisition will be paid in instalments, with US$600,000
being paid immediately on signing the agreement to acquire the
remaining 50% shareholding and the balance of US$1.3m to be paid on
or before 30 April 2017.
The Acquisition is conditional on, amongst other things, certain
procedural share registrations in Ethiopia and capital gain tax
clearance on the Sellers, which are expected to be completed on or
before 30 April 30 2017. Further announcements will be made at the
appropriate time.
Enquiries:
Bagir Group Limited
Eran Itzhak, Chief Executive Officer +44 (0) 1483
Udi Cohen, Chief Financial Officer 751577
N+1 Singer (Nominated Adviser &
Broker)
Alex Price +44 (0)20 7496
Sandy Ritchie 3000
Novella Communications (Financial
PR)
Tim Robertson +44 (0)20 3151
Toby Andrews 7008
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQBDGDDBDGBGRU
(END) Dow Jones Newswires
February 06, 2017 02:00 ET (07:00 GMT)
Bagir (LSE:BAGR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bagir (LSE:BAGR)
Historical Stock Chart
From Jul 2023 to Jul 2024