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Tefron to buy seamless activities of Nouvelle Canada

20
Nov '10
Tefron Ltd, a leading producer of seamless intimate apparel and engineered-for-performance (EFPTM) active wear, announced the execution of an agreement to acquire the seamless activities of Canadian apparel manufacturer, Nouvelle. Tefron also announced that it had entered into agreements to raise new capital.

In the first transaction, Tefron will acquire the seamless assets of Nouvelle Seamless Inc. (Nouvelle). Nouvelle is a private Canadian manufacturer of mass market seamless apparel which has established a strong position in both private label and branded products with broad distribution through leading U.S. retailers, including Walmart, Sears, TJMAXX, Avenue (United Retail Group), and others.

Separately, three investor groups will be investing an aggregate amount of $5.2 million in Tefron: the Lieberman family of Canada who are the controlling shareholders of Nouvelle, Shamir Insurance, and a group of investors led by the Rimon Investment Master Fund (Rimon Funds). These investments are subject to due diligence on the part of the investors, modifications to Tefron's bank financing arrangements and other conditions to closing, and there is no guarantee that the investors will invest all or any part of the $5.2 million.

In addition, Tefron is in advanced negotiations to modify its current financing agreement with its bank lenders, including to increase its credit and debt facilities with the banks by at least $5 million and to establish new financial covenants according to the company's business plan.

Commenting on the transactions, Tefron CEO Amit Meridor said, "These agreements have far-reaching implications for Tefron which took upon itself a challenge to regain its leading position in seamless apparel and performance apparel. Implementation of our turnaround program has succeeded in building an efficient and competitive cost structure, which is a vital component in executing the company's strategic plan going forward. The contemplated significant investment by the Lieberman family, Shamir Insurance and Rimon Funds will help to further solidify Tefron's financial strength and security. The acquisition of the Nouvelle activity, with its strong product offering to the mass market and its customer portfolio, complements Tefron's activity in the market and will strengthen Tefron's sales and marketing network in the U.S. market."

Chairman of the Board, Arnon Tiberg remarked, "The capital raising in Tefron of $5.2 million confirming the support and trust of new and existing investors, will enable the company to look ahead and focus on growth and long-term expansion."

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.


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