ICICI to pick up 40 per cent stake in Arvind Garments
(Tuesday, December 21, 1999)
Santosh Nair & Pradipta Bagchi in Mumbai
Financial institution ICICI Ltd is picking up a 40 per cent stake in Arvind Garments, the newly formed retail clothing subsidiary of Arvind Mills Limited (AML), for a consideration of about Rs 100 crore ($23 mil).
According to institutional sources, ICICI will taking up the stake through optionally convertible debentures. The deal is expected to be signed in the next couple of days.
The debentures will be converted into equity if the company manages to meet its revenue and earning projections over the next few years, said sources. Otherwise, the debentures will not be converted into equity and will have to be redeemed.
It is also understood that the new shareholder is backing Arvind Garment's attempts to buy brands like Allen Solly, Van Heusen and Peter England. If the Arvind Garment's bid is successful, ICICI will arrange the funds to complete the acquisition.
Arvind Mills has also been in talks with three other players for the sale of the 40 per cent stake, with the American Insurance Group (AIG) being one of them.
It may be recalled that Arvind Mills had recently spun off its garments and telecom business as part of its drive to restructure its business portfolio. Company officials when contacted declined to make any specific comments.
"We are still in talks with more than one potential buyer and no deal has been signed so far. We have nothing more to say," said a top company official.
The garments division of AML markets jeans, cotton trousers, T-Shirts and casual shirts under the brand names Arrow, Lee, Newport, Flying Machine, Ruggers, Excalibur and Ruf&Tuf.
The total turnover of the garment operations was Rs 150 crore ($35 mil) in 1998-99. Sales stood at Rs 50 for the first quarter of the current fiscal. At the time of the spin off, company management had said that it would list the subsidiaries through an initial public offer to help raise cash for the cotton textiles business. AML is currently going through a lean patch due to the downturn in the cotton textiles business.
business-standard.com |
