"Through forming this strategic partnership with Shandong Ruyi Group together with the significant increase in capital, the transaction has the potential to transform the company and its ability to compete and win major apparel manufacturing contracts from the world's largest retailers," Bagir said in a press release.
Shandong Ruyi will be a majority shareholder in the company and one or more director(s) will be nominated by Shandong Ruyi to join the board of Bagir, subject to the completion of the necessary regulatory due diligence. Under the proposed agreement Shandong Ruyi will subscribe for 359,560,310 new ordinary shares at approximately 3.5 pence per share. The issue price is approximately the same price as Bagir's last fundraising round, carried out in December 2016 and represents a 155 per cent premium to the price of 1.375 pence per ordinary share. The transaction is subject to the approval of Bagir's shareholders.
The new capital will be used partly to expand significantly the suit trouser and establish the jacket production lines in the Bagir's duty free and cost-competitive Ethiopian manufacturing base, enhance R&D and innovation activities and provide the working capital to support the growth.
"It has been our view for some time that Ethiopia is proving to be potentially transformational. The Shandong Ruyi Group team recognises the strength and experience that we have across our business and it is our advanced position in Ethiopia which they have identified as providing them with a global strategic advantage. With Shandong Ruyi Group as a key shareholder and partner we believe that Bagir will be best placed to exploit the opportunity presented by our Ethiopian manufacturing base far quicker and with more certainty than we could independently," Eran Itzhak, chief executive officer of Bagir.
Shandong Ruyi Group also has significant distribution with more than 4,000 points of sales (POS) network that services a global customer base spread across 6 different continents. Shandong Ruyi Group has over 20 subsidiaries, with three listed subsidiaries in China, France and Japan. (RR)
Fibre2Fashion News Desk – India
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