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Rex Trueform - Closure of the Salt River Factory and cautionary announcement
Rex Trueform Clothing Company Limited
(Incorporated in the Republic of South Africa)(Registration number 1937/009839/06)
Share codes: RTO, RTN and RTOP
ISIN NUMBERS: ZAE000006144, ZAE000009700 and ZAE000006151
(`Rex Trueform` or `the Company`)CLOSURE OF THE SALT RIVER FACTORY AND CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders of the Company were informed in the profit announcement for
the six months ended 31 December 2004 that, given further deterioration in the business environment, the Company had been compelled to consult with
its trade union and other employee representatives over the future of the
Salt River tailoring facility.
In an update on the proposed closure of the Salt River factory, published on 24 May 2005, shareholders were informed that the Company had been
involved in extensive consultations with the South African Clothing and
Textile Workers Union (`SACTWU`) other employee representatives and the
task team representing the Western Cape government, regarding proposed retrenchments. Negotiations had also taken place with a BEE consortium and
the directors had indicated their willingness to offer attractive terms for
the lease of the Salt River buildings and equipment for continued
operations.2. Details of agreements entered into
The Company is pleased to report that negotiations with Brimstone Clothing
Corporation (Pty) Limited (trading as House of Monatic) (`Brimstone`) have
now been finalised and agreements entered into as follows: 2.1 Agreement has been reached between the Company, SACTWU and Brimstone,
whereby approximately 900 employees of the Company will be retrenched.
The total cost of this retrenchment amounts to approximately R29-
million, which will be borne by the Company. 2.2 A lease agreement has been concluded with Brimstone whereby the
Company leases its main factory building situated at Salt River to
Brimstone, except for the second floor of the building and certain
adjacent areas, which will continue to be occupied by the Queenspark head office.
The lease is rent-free for an initial 12 months commencing 1 January
2006, with an option for renewal at preferential rates until 31
December 2010. 2.3 The moveable assets comprising plant, equipment and furniture required
by Brimstone to continue operations in the factory building, are
included in the lease agreement. Brimstone has the option to purchase
these moveable assets during the term of the lease. 2.4 The Company has also entered into a user agreement with Brimstone
which allows for the use of the Rex Trueform name.
2.5 These arrangements are subject to Competition Authority approval.
Rex Trueform will continue scaled down operations in the Salt River factory from 1 July 2005 to 31 December 2005 pending the takeover of its operations
by Brimstone and the consolidation of its remaining manufacturing
operations at its Atlantis factory.
3. Trading update A trading update that will take into account the impact of the closure of
the Salt River factory and the cost of the retrenchment on the financial
results of the Company for the financial year ending 30th June 2005, will
be issued in due course when the Company`s financial results are reasonably certain.
4. Cautionary announcement
Shareholders are advised that the purchase price of the moveable assets
which Brimstone has an option to acquire will be determined at the latest by the parties within two months of the lease which commences on 1 January
2006. Shareholders are therefore advised to exercise caution when dealing
in Rex Trueform securities until the purchase price has been determined and
the value of the potential disposal categorised in terms of the JSE Securities Exchange South Africa (`JSE`) Listings Requirements. A further
announcement in terms of the JSE Listings Requirements will be made at that
stage if required.
Cape Town15 June 2005
Sponsor
Nedbank CapitalDate: 15/06/2005 04:43:04 PM Produced by the JSE SENS Department
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