India : GHCL buys out third largest US textiles firm

The Rs 535-crore GHCL Ltd, India's largest soda ash maker, has acquired the third largest US made-up textiles company, $230-million Dan River Inc, for $17.5 million. Dan River counts among its customers retail players like JC Penny and Linen & Things, Wal-Mart, Bed, Bath & Beyond. The acquisition will be funded from the proceeds of the $80.5 million FCCB (foreign currency convertible bonds) issue concluded by GHCL recently.

Dan River, which recently emerged from Chapter 11 proceedings in the US, has working capital debts of $45 million and long-term liabilities of $35 million, which GHCL will need to refinance soon. The acquisition process is likely to be completed by first week of January 2006, after which the company would have a complete control over Dan River's operations.
 
GHCL plans to close down the US operations of Dan River and outsource all products from India, Pakistan and China. GHCL chairman Sanjay Dalmia is targeting Dan River's 2006 revenues at $300 million. Of this GHCL's own unit at Vapi will supply one-third or $100 million of goods to Dan River.

GHCL is in the process of completing its own home textile manufacturing facility at Vapi at a cost of Rs 230 crore.

Production at this unit is set to begin by March 2006. The outsourcing order for the Vapi unit will account for 90% of its installed capacity.

Financialexpress.com