Sabvest stitches up new label deal

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Sabvest stitches up new label deal

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Published Date: 2018-01-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sabvest stitches up new label deal

The investment group plans to invest directly in label designer and manufacturer ITL in a deal that will boost its `NAV

Sabvest has announced a deal that will see its SA Bias Industries subsidiary selling its International Trimmings and Labels (ITL) division for about $186.9 million to a consortium of investors led by businessman Peter Gain.

However, it plans to remain invested in ITL group, which designs, makes and distributes apparel labelling and identification products and supply management solutions, through a series of transactions. It will buy a 30% direct stake in Mandarin Industries, the new holding company for ITL's offshore business, for $34 million, as well as a stake in ITL South Africa for R33 million. It will also buy preference shares worth R60 million with an initial coupon of 8% per annum.

The investment holding company says the switch will help boost its net asset value by 35% to R50.40 and result in headline earnings per share for the year to December 2017 more than doubling to R14.98. However, once it has reinvested in the new businesses it says there will be no effect on NAV per share as the investment amount and the fair values of the investments will be the same.

Sabvest says the ITL group is an attractive investment opportunity in an international and South African group of companies with good growth prospects. It operates from factories and marketing offices in the UK, the US, Canada, China, India, Sri Lanka, Turkey, Bangladesh, Vietnam, Mexico and South Africa for supply to the clothing industry across the globe.

It says the deals will be funded from its cash resources after receipt of an expected cash dividend from SA Bias derived from the proceeds of the sale of ITL.

The company's SBV shares ended trade unchanged at R23, while its SBN shares jumped 20% to R33 in eight deals.



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