Singer N.V. announced that it has entered into a definitive agreement pursuant to which KSIN Holdings, Ltd., an affiliate of funds managed by Kohlberg & Co., LLC, will acquire the Singer worldwide sewing business and the SINGER(R) trademark for approximately U.S. $125 million, consisting of cash, assumption of debt, and a $15-million subordinated promissory note.
The sewing business that is being sold includes Singer's marketing operations in Brazil, Canada, China, the Czech Republic and Hungary, Denmark and Sweden, Italy, Mexico, the Middle East and Africa, South America and the Caribbean, Turkey, and the U.S., as well as a network of independent distributors and dealers in more than 100 additional markets. The business also includes manufacturing facilities in Brazil and China. The sewing marketing and manufacturing operations accounted for about 51 percent of Singer's 2003 revenue, and 57 percent of Singer's 2003 operating earnings before corporate expenses and eliminations.
Following the closing of the transaction, which is expected to occur in the third quarter of 2004, Singer will continue to own 56.8 percent of the equity of Singer Asia and 100 percent of the equity of Singer Jamaica, the company's retail and trading businesses in Asia (presently operating primarily in Bangladesh, India, Pakistan, the Philippines, Sri Lanka, and Thailand) and in Jamaica. Pursuant to agreements with KSIN, the Retail businesses will continue to have the right to use the SINGER(R) name in their markets and will continue to be the exclusive distributor in these markets for SINGER(R) branded sewing machines and related sewing products.
At the closing of the transaction, Singer will receive approximately $71 million in cash, subject to certain closing price adjustments. The sewing machine maker expects to use a portion of the cash proceeds received in the transaction to repay certain outstanding corporate debt. Plans for utilization of the balance of the proceeds have not been finalized, but possible uses may include investing in existing and new businesses, dividends on the company's Common Stock, and share buybacks of the Company's Common Stock. Singer expects to realize an accounting loss of approximately $15 million on the transaction.
"The sale of the Sewing business and of the SINGER(R) trademark represents a fundamental shift in Singer's strategy and structure," Stephen H. Goodman, Singer's chairman, president, and CEO, said in a statement. "The cash received from the sale will enable Singer to repay the corporate debt remaining from the company's successful Chapter 11 reorganization in September 2000, and be in an improved liquidity position to help fund the growth of the Singer Asia business, explore other new business opportunities, and possibly return cash to the shareholders through dividends and/or a share buyback program."
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