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L.A. GROUP LIMITED - DISPOSAL OF US JOINT VENTURE
L.A. GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1936/008786/06)
Share Code: LAR ISIN: ZAE000028676
Share Code: LAN ISIN: ZAE000028684
("L.A. Group" or "the company")
Disposal of US joint venture
Sasfin Bank Limited is authorised to announce that L.A. Group and its wholly-
owned subsidiary, Carter Harris (Proprietary) Limited ("Carter Harris"), has
entered into an agreement to dispose of its joint wholesale corporate clothing
distribution venture in the U.S. ("the U.S. joint venture") to Launch Uniforms
CC ("Launch"), a closed corporation controlled by Mr JL Gochin, with effect from
28 February 2003 ("the effective date").
Rationale for the disposal
Carter Harris, a wholly-owned subsidiary of L.A. Group, is a market leader in
the design and distribution of corporate clothing. Carter Harris has focused
primarily on the South African corporate clothing market with many of South
Africa"s major companies amongst its clients. During 2002, the U.S. joint
venture was set up in association with Mr JL Gochin to realise expected benefits
from the introduction of the new Africa Growth and Opportunities Act ("AGOA")
for exports to the U.S.
However, the continued strengthening of the Rand together with the highly
competitive nature of the corporate clothing market in the U.S. has resulted in
L.A. Group and Carter Harris reconsidering its U.S. international corporate
clothing strategy. It has been decided to dispose of the U.S. joint venture and
to strengthen the focus on and penetration in its existing core markets.
Details of the disposal
Carter Harris has disposed of the fixed assets, stock, receivables, goodwill,
assessed and submitted Duty Credit Certificates ("DCC"s") and any or all
contracts of the U.S. joint venture to Launch as a going concern with effect
from the effective date. The purchase price approximately represents the book
value of the assets, which will be finalised pending the completion of the
verification thereof. The purchase price, excluding that which relates to the
DCC"s, is payable in three tranches with the first tranch due on 28 February
2003, the second on 31 March 2003 and the third on 30 April 2003. The portion
of the purchase price relating to the assessed DCC"s is payable on the date upon
which the respective assessed DCC"s are utilised or disposed of, provided that
the total purchase price payable shall be paid by no later than 15 May 2003. In
the case of submitted DCC"s and which have not been assessed, payment thereof
will take place not later than 75 days after they have been assessed.
The liabilities of the U.S. joint venture, consisting of trade creditors and
other short-term debt, will be settled upon receipt of the purchase
consideration.
Financial effects
Taking into account the settlement of the liabilities, the effect of the
transaction on the net asset value and earnings per share of L.A. Group will not
be material. Full disclosure of the financial effects of the transaction will
be made with the publication of the group"s results for the year ended 28
February 2003, expected during the first half of May 2003.
Cape Town
14 March 2003
Corporate Advisor and Sponsor
Sasfin Bank Limited
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