Thursday, April 29, 1999 Published at 09:06 GMT 10:06 UK
Business: The Company File
Laura Ashley shops sold for a dollar
Laura Ashley: Bankers are setting stiff terms if their support is to continue
Its entire operation there is to be off-loaded after bankers warned that financial support would end if it the shops remained part of the group.
Losing the bankers' backing would have triggered the collapse of Laura Ashley, a company best known for its flowery designs and aura of rural simplicity but now laden with debt.
There is also to be a share issue to try to raise capital in order to pay off some of the millions of pounds owed in loans.
Sell off or else
The company said that without this extension "it would not be able to meet its commitments and...would not avoid insolvent liquidation".
Laura Ashley has reported declining annual losses of £17m ($27.5m) for 1998, down from £26m the year before.
Laura Ashley has hardly been out of the headlines in recent years and usually makes waves for the wrong reasons.
Its business has been slumping since its heady days of the 1960s and 70s.
More recently, its problems have included:
It now plans to sell the North American businesses to a management buy-out team headed by Paul Ng, president of the North American business, along with Regent Carolina Corporation and Bonham.
Bonham is a private company controlled by Laura Ashley chairman Kay Peng Khoo, while Regent Carolina is 49% owned by Malayan United Industries, a listed Malaysian company of which Kay is also chairman.
Agreement has been reached to sell the North American business for $1 to Laura Ashley (North America), the management buy-out vehicle, and to write off £34.4m of debts.
This disposal follows an attempted sale of the North American business in which the management team was the only potential buyer to make an offer.
The extra funding is expected to come from a one-for-two rights issue at 13p a share, jointly underwritten by MUI and Bonham.
The proceeds will be used for general working capital purposes, to finance the disposal of the North American business, and to settle bank borrowings.
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