HONG KONG: Novel Denim Plans To Go Private
Novel Denim Holdings Limited on Wednesday said its management team is mulling taking the fabric maker private.
Supported by the company's controlling shareholder Novel Apparel (BVI) Limited, the plan its to acquire for $0.95 per share in cash, the three million outstanding publicly traded ordinary shares of the company not held by Novel Apparel and the Company's management.
Novel Denim's president and chief executive officer, Mr KC Chao, said: "The financial and strategic challenges facing our business and those affecting the overall apparel market, as well as increasing public company costs, including expenses related to compliance with the Sarbanes-Oxley Act, make it difficult for a company like Novel Denim to continue to operate as a reporting company."
He added: "We are undertaking this transaction to save the costs of being public, which are expected to exceed $1.25 million in fiscal year 2006."
A special committee of independent directors of Novel Denim has been formed to explore potential transactions that would have the effect of causing the company's ordinary shares to be deregistered and delisted from the SEC and Nasdaq, respectively, will evaluate this proposal along with its own legal and financial advisors.
Novel Denim, which makes denim, chino, twill and printed fabrics at facilities in South Africa and China, recently reported a second quarter net loss of $0.6 million and said that it expects the third quarter net loss to be around $0.5 million.
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