In the agreement to acquire the operations and certain assets of Nouvelle in
seamless activities, Tefron will acquire, inter alia, the Nouvelle customer list
as well as the right to deal with those customers, reputation and goodwill, and
existing and future work orders. Tefron will acquire these assets in exchange
for 9.6% of Tefron's outstanding shares post-issuance.
Tefron will issue in the aggregate a number of new shares equal to 49% of its
total outstanding Tefron shares following the issuance, to cover the acquisition
of the Nouvelle operation, as well as for the $5.2 million dollar investment by
the Lieberman family, Shamir Insurance, and Rimon Funds. Tefron will issue to
Nouvelle 600,000 shares as consideration for the acquisition of the assets
contemplated under the transaction. Under the agreements, the Lieberman family,
the controlling shareholders in Nouvelle, is to invest $2.7 million, to acquire
20.5% of Tefron shares, increasing its holdings in Tefron to 30.2%, Shamir
Insurance is to invest $ 1.3 million for a consideration of 9.9% of Tefron
shares, and the investors group led by Rimon Funds are to invest a total of $1.2
million in exchange for 9.1% of the company shares.
The transaction is subject to fulfillment of conditions, including, inter alia,
approval of the transaction at the special general shareholders meeting of the
company by a special majority, and a modified financing arrangement with the
banks. The company is in advanced stages of negotiations with the financing
banks to increase its credit and debt facilities by at least $5 million and to
determine new financial covenants to the satisfaction of new investors. The
company is awaiting approval from the banks for these transactions, and there is
no certainty that such authorization will be received. The company will provide
updated information at the time of the signing of a final modified financing
arrangement with its bank lenders.
The company intends to call for a shareholders meeting to approve the
transactions. The invitation will include a description of the transactions,
financial reports, and a Board report in relation to the acquired operations, as
required by the Securities Regulations (Transaction between a Company and
Controlling Shareholder) 2001 and Regulations (Private share offering in a
listed company) 2000.
About Tefron:
Tefron is a market leader in the field of apparel, serving customers in the U.S.
and Europe. Tefron focuses on developing, producing, marketing and selling
undergarments, athletic wear, beach and swimwear. Tefron activities are divided
into two business sectors: "Seamless" design, development, production and sale
of undergarments and athletic apparel; and "Cut & Sew" design, development,
production and sale of undergarments, swimsuits and athletic apparel. The design
and production are mainly performed in Israel, Jordan and the Far East, while
the finished goods are sold mainly in the U.S. and Europe. Company customers
include leading international players, such as: Hanes Brands Industries, Reebok,
Patagonia, Lululemon Athletica, GAP, Calvin Klein, Wal-Mart, Victoria's Secret.
THIS PRESS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WITHIN THE
MEANING OF SECTION 27A OF THE US SECURITIES ACT OF 1933, AS AMENDED, SECTION 21E
OF THE US SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE SAFE HARBOR
PROVISIONS OF THE US PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WITH
RESPECT TO THE COMPANY'S BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT
EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS.
WORDS SUCH AS "BELIEVE," "ANTICIPATE," "EXPECT," "INTEND," "WILL," "PLAN,"
"COULD," "MAY," "PROJECT," "GOAL," "TARGET," AND SIMILAR EXPRESSIONS OFTEN
IDENTIFY FORWARD-LOOKING STATEMENTS BUT ARE NOT THE ONLY WAY WE IDENTIFY THESE
STATEMENTS. EXCEPT FOR STATEMENTS OF HISTORICAL FACT CONTAINED HEREIN, THE
MATTERS SET FORTH IN THIS PRESS RELEASE REGARDING OUR FUTURE PERFORMANCE, PLANS
TO INCREASE REVENUES OR MARGINS AND ANY STATEMENTS REGARDING OTHER FUTURE EVENTS
OR FUTURE PROSPECTS ARE FORWARD-LOOKING STATEMENTS.
THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH
FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT LIMITED TO:
o THE EFFECT OF THE WORLDWIDE RECESSION ON OUR SALES TO OUR CUSTOMERS IN
THE UNITED STATES AND IN EUROPE AND ON OUR ABILITY TO FINANCE OUR
OPERATIONS;
o OUR CUSTOMERS' CONTINUED PURCHASE OF OUR PRODUCTS IN THE SAME VOLUMES
OR ON THE SAME TERMS;
o THE CYCLICAL NATURE OF THE CLOTHING RETAIL INDUSTRY AND THE ONGOING
CHANGES IN FASHION PREFERENCES;
o THE COMPETITIVE NATURE OF THE MARKETS IN WHICH WE OPERATE, INCLUDING
THE ABILITY OF OUR COMPETITORS TO ENTER INTO AND COMPETE IN THE
SEAMLESS MARKET IN WHICH WE OPERATE;
o THE POTENTIAL ADVERSE EFFECT ON OUR BUSINESS RESULTING FROM OUR
INTERNATIONAL OPERATIONS, INCLUDING INCREASED CUSTOM DUTIES AND IMPORT
QUOTAS (E.G., IN CHINA, WHERE WE MANUFACTURE FOR OUR SWIMWEAR
DIVISION).
o FLUCTUATIONS IN INFLATION AND CURRENCY RATES;
o THE POTENTIAL ADVERSE EFFECT ON OUR FUTURE OPERATING EFFICIENCY
RESULTING FROM OUR EXPANSION INTO NEW PRODUCT LINES WITH MORE
COMPLICATED PRODUCTS, DIFFERENT RAW MATERIALS AND CHANGES IN MARKET
TRENDS;
o THE PURCHASE OF NEW EQUIPMENT THAT MAY BE NECESSARY AS A RESULT OF OUR
EXPANSION INTO NEW PRODUCT LINES;
o OUR DEPENDENCE ON OUR SUPPLIERS FOR OUR MACHINERY AND THE MAINTENANCE
OF OUR MACHINERY;
o THE FLUCTUATIONS COSTS OF RAW MATERIALS; OUR DEPENDENCE ON
SUBCONTRACTORS IN CONNECTION WITH OUR MANUFACTURING PROCESS;
o OUR FAILURE TO GENERATE SUFFICIENT CASH FROM OUR OPERATIONS TO PAY OUR
DEBT;
o POLITICAL, ECONOMIC, SOCIAL, CLIMATIC RISKS, ASSOCIATED WITH
INTERNATIONAL BUSINESS AND RELATING TO OPERATIONS IN ISRAEL;
AS WELL AS CERTAIN OTHER RISKS DETAILED FROM TIME TO TIME IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.
CONTACTS
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COMPANY CONTACT:
ERAN ROTEM
CHIEF FINANCIAL OFFICER
+972 4 9900803
reran@tefron.com
