Textile firm Leeds Group has agreed a £657,000 deal to dispose of its Germany-based subsidiary, Hemmers-Itex Textil Import Export GmbH.
The Wetherby-based importer of fabrics from the Far East announced that it will sell the loss-making business to a subsidiary of Nooteboom Bidco B.V but retain Hemmers' three properties worth an estimated £5.2m. Leeds Group shareholders will be asked to approve the deal at a general meeting next month and competition clearance will need to come from the German Cartel Office.
Bosses say they had looked at different options to turn around Hemmers' loss making over a number of years but came to the conclusion it could not be profitable as a standalone business. The group said that amid consolidation in the textile market, Hemmers would be better placed as part of a larger organisation.
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In its announcement to the London Stock Exchange, Leeds Group said: "The board believes that the proposed sale is in the best interests of the company, shareholders and Hemmers and will recommend shareholders vote in favour of the proposed sale. Certain major shareholders, representing 54.24% of the company's shares, have indicated that they will vote in favour of the proposed sale.
"The effect of the proposed sale will be that the company will no longer have any trading business or activities and will become an AIM Rule 15 Cash Shell. The disposal will constitute a fundamental change of business of the company under Rule 15 of the AIM Rules and is therefore conditional on the passing of a resolution to approve the disposal at a general meeting of the company."
Hemmers had turnover of £24.29m in the year to the end of May, and made a pre-tax loss of £793,000. It supplies fabrics for use in clothing and furnishings, and counts European manufacturers among its customers.
