Dawson continues to supply Dunelm with Dorma brand

08 Aug '08

2 min read

Dawson International PLC announces that it has entered into an agreement to sell the Dorma trademark and associated rights to Dunelm Group plc (“Dunelm”) for a cash consideration (“the Consideration”) of £5 million.

The sale is conditional on the release of security over the trademark and associated intellectual property rights by the Company's lenders, which is expected within the next 14 days.

In conjunction with the sale agreement, the Company has entered into a trading agreement in terms of which Dawson will continue to supply Dunelm with Dorma brand and own-brand bed linen for an initial period of four years with certain minimum guarantees. Dunelm has also granted the Company a licence to use the Dorma brand until January 2011.

At the end of this period Dawson will cease supplying Dorma branded products to third parties other than Dunelm.

As a consequence of entering into this agreement the Company will incur costs of exiting its Dorma Branded business by January 2011. The final amount of the cash cost is uncertain due to the length of time involved but is currently estimated at not more than £3.3 million. The net consideration will be used to reduce debt. The Dorma Branded business currently employs approximately 420 staff, with the vast majority of these working in its retail concessions.

In the year ended 29 December 2007, the Dorma Branded business recorded an operating loss, inclusive of central overheads, of £3.6 million. The trademark and associated intellectual property rights, which are the subject of the sale, were carried at nil value in the balance sheet.

Andy Bartmess, Chief Executive commented:
“Dawson acquired Dorma Group Limited in February 2005 and restructured it into separate Dorma Branded and Private Label businesses. The overall results of Dorma Group have improved significantly since acquisition however while the Private Label business is now growing and trading profitably the Dorma Branded business, although much improved, continues to trade at a loss reflecting a decline in some of its traditional markets such as mail order and independent retailers.

This transaction enables us to focus on the growth area of the business and generates cash both through the net consideration for the brand and the liquidation of working capital. It also further strengthens our relationship with one of our major Private Label customers.”

Dawson International PLC

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