News Flash

Li & Fung AME acquisition to establish LF USA

05 Nov '07

4 min read

For the fiscal year ended 31 December 2006, American Marketing Enterprises' net sales were approximately US$140 million, and profit before tax was approximately US$14.9 million.

Property Transactions:
Li & Fung also announced that it has entered into sales and purchase agreements with Li & Fung (1937) Limited's indirectly wholly owned subsidiaries for the disposal of five subsidiaries which principally own the Group's properties in Hong Kong.

At the same time, Li & Fung will lease back the properties which have a remaining term of one month followed by three consecutive options exercisable by the Group over a period of nine years.

These transactions are in line with the Group's longstanding asset-light strategy which includes, if possible, not owning factories or properties.

The transactions are subject to approval by the Independent Shareholders at the SGM in December 2007 and will be executed on an arms-length basis. The properties will be sold at a price of HK$1, 401.5 million based on the average of two independent market valuations of the properties.

As a result of the disposal, the Group is expected to record an unaudited gain of approximately HK$449 million in aggregate after deducting estimated expenses of approximately HK$15 million.

The Group will lease back the same properties with a rental equivalent to the average of the aggregate open market rent of the properties subject to a maximum rental of approximately HK$72 million per annum for 2008, 2009 and 2010.

Mr. Bruce Rockowitz, President of Li & Fung (Trading) Limited, said, “These transactions are consistent with our overall asset-light strategy and provide considerable benefits to Li & Fung.

Firstly, the sales will furnish the Group with a liquid and healthy balance sheet upon completion. Additionally, the sale will provide immediate access to long-term leases at reasonable rents, which is important for our operations. At the same time, the net proceeds from this transaction will help finance future acquisitions.”

Li & Fung Limited

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