Tefron to Raise $40-50 Mln on Wall Street at $150-200 Mln Company Value

Textile manufacturer Tefron, controlled by TASE-traded MacPell, has begun taking steps towards a Wall Street IPO. Tefron, considered one of Israel’s most profitable textile companies, despite the textile sector crisis, ended 1996 on an impressive NIS 47 million net profit, and is set to issue shares at $150-200 million company value.

Tefron intends to issue a 25% share, and raise $38-50 million. If the IPO does go as planned in September, MacPell may record $50 million in gross capital gains. However, it should be noted MacPell has emphasized the IPO is not certain, and that only preparatory measures are being taken at present.

MacPell, for whom Tefron is a primary profit center, owns 51% of Tefron, after having acquired 60% of the company from Discount Investment Corporation in 1993 for the low price of $10 million.

Discount Investments decided to sell control in Tefron after the textile manufacturer encountered heavy losses in the early 90’s. Given the current profitability, it’s fair to assume Discount Investments regrets the decision.

However, Discount Investments still owns a share bloc representing 26% of Tefron, after exercising an option in 1996 to increase its holdings in the company by 9% for NIS 3 million. Discount Investments, of course, will benefit from relatively high capital gains following the Tefron IPO, as on the books, its investments in the company are small sums.

Following the IPO, MacPell’s holdings in Tefron may be reduced to 38%, while Discount Investments’ holdings will go down to 19%.

Tefron makes under-garments with advanced computerized equipment, which enables automated manufacturing using a relatively low amount of manpower. Over the past two years, Tefron has undergone a revolution, refocusing on the US and Europe as its target markets, and signing marketing agreements with multinationals such as Calvin Klein and Victoria’s Secret.