Pacific Brands (PBG) will take a loss of around $30 million after it yesterday finalised the sale of its shoe and clothing brands, including Volley, to several buyers for $39 million in a series of deals that end its corporate slimming program.
Confirmation of the sale, and that it was the final transaction in the company’s current restructuring saw Pacific Brands shares jump a solid 4.4% to 51.7c yesterday.
Shoe brands Volley, Hush Puppies and Clarks has been bought by private equity firm Anchorage Capital Partners, while Dunlop and Slazenger has been sold to the UK company that owns the brands outside of Australia and New Zealand.
Pacific Brands said the Footwear and Apparel will be sold to Australian private equity firm Anchorage Capital Partners. "Owned brands, including Grosby, Julius Marlow and Volley, as well as licensed brands Clarks, Hush Puppies, Mossimo and Superdry, and the Iconix Joint Venture will transfer with the business.
"Sport brands Dunlop and Slazenger will be sold to IBML, a division of UK-based Sports Direct International Plc, who owns these brands outside Australia and New Zealand. The Everlast equipment licence from IBML to Brand Collective will be terminated in connection with the sale.
"Sport assets related to the Sport business, including Everlast equipment, will be sold to Designworks, a division of Australian listed company The PAS Group who will license the Dunlop, Slazenger and Everlast brands from IBM.
"Gross proceeds from the transactions of approximately $39 million, on a cash and debt free basis, will be applied to further reduce net debt,” the company said. Debt at June 30 was around $249 million.
"The carrying value of related net assets to be disposed is expected to be approximately $66 million at completion. Subject to cost of disposal and completion adjustments, Pacific Brands expects to recognise a loss on sale of approximately $30 million in the financial year ending 30 June 2015.
"In the financial year ended 30 June 2014, the Brand Collective business reported total sales of $204.5 million and an EBIT loss of $22.3 million (reported) or $0.9 million before significant items. An element of corporate and shared services costs allocated to the Brand Collective business will be unrecovered following full transition of the business, estimated to be approximately $2 million per annum net of savings from associated restructuring initiatives,” Pacific Brands said.
Pacific Brands Chief Executive Officer David Bortolussi said in yesterday’s statement that, “This transaction also represents the conclusion of the strategic review. The divestments of Workwear and Brand Collective will dramatically simplify Pacific Brands and significantly improve the overall quality and growth prospects of the brand portfolio.
“We will continue to consider other options to build shareholder value including further investment in our brands, wholesale partnerships, retail stores, online, category expansion and international distribution”.
