The situation of textiles company Tefron Ltd. (Bulletin Board: TFRFF; TASE:TFR) is far from wonderful, but it seems that the measure of improvement that it has managed to achieve did not escape the notice of a foreign company in the same field of activity. The foreign company has expressed interest in making a strategic investment in Tefron.
Tefron reported to the stock exchange today that, on August 19, it signed a non-binding memorandum of understanding with a foreign company whose name was not disclosed. This was with a view to deal whereby the foreign company would invest some $4 million in Tefron, in exchange for an allocation of shares and warrants. In addition, the foreign company will transfer to Tefron certain assets, among them a list of customers and the right to deal with those customers.
Although more than a month has gone by since the memorandum was signed, Tefron has not reported it until today. After its share price rose by more than 60% in the past five weeks, the company took the view that information about the deal being formulated may have leaked, and decided that the prudent course was to report it.
In response to the report, Tefron's share price on the local market shot up 14.8%. However, Tefron points out that the memorandum is non-binding, and that the two companies are currently negotiating on a final, binding agreement. At this stage, there is no certainty that a deal will be signed.
Any deal will have to obtain the agreement of the lender banks with which Tefron reached an arrangement a few months ago: Leumi, Discount, and Hapoalim.
Tefron, which since January has been headed by Amit Meridor, has three fields of activity: seamless textiles, conventional textiles, and production of swimwear.
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2010
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