Edcon to sell a portion of its manufacturing division
03 August 2006
In an effort to reinvigorate its clothing manufacturing arm as well as help support DTI objectives to strengthen the sector
Edcon today announced its intentions to sell 51% of its manufacturing operation to a consortium comprising management and staff and the newly-appointed Executive Chairman, John Comley. A consultation process with labour will continue.
Comley is well-known in industry circles for having revived Eddels, a shoe factory in Kwa-Zulu Natal where Celrose is located, by introducing innovative worker-participation and incentive schemes to enhance both productivity and profitability.
To facilitate the transaction Edcon is providing finance for the purchase price on very favourable terms. Edcon will have a 49% interest in a new company to be formed, which will hold the assets, and will in addition guarantee an agreed-upon overdraft facility to fund ongoing working capital requirements.
"After consultation with stakeholders, we have decided to retain a share in the business," said Edcon CEO Steve Ross. "All current and future orders will be processed to ensure minimal disruption and Edcon will continue to be supportive of the new company to grow its business. The factory has clean inventories, a reputable client base and a strong order book - we think the business is in a good position for this transaction to be successful." Celrose's newly-appointed Executive Chairman, John Comley, believes in a multi-skilled, empowered workforce which is financially and philosophically aligned with the business objectives. Eddels shoe factory, where Mr Comley is Chairman, has increased productivity, reduced turnaround time on orders, boosted profitability and all but eliminated staff turnover.
"I look forward to working with my new colleagues at Celrose to implement some of the techniques we have successfully put into practice at Eddels. The clothing and textile manufacturing sector faces some of the same challenges we did, but by pulling together and using our collective knowledge to find new and better ways of doing business, I am confident we will overcome these hurdles and build a profitable and sustainable enterprise at the new company," said Comley. "We look forward to the support of all our stakeholders during this transitional period."