Brierley’s to take a main interest in Lane Walker

Press, 12 October 1985, Page 1

Brierley’s to take a main interest in Lane Walker

By

NEILL BIRSS,

business editor

Brierley Investments, Ltd, will take a main interest in the Christchurch textile firm, Lane Walker Rudkin, Ltd.

The managing director of Lane Walker, Mr Peter Rudkin, said last evening that an agreement had been negotiated with Brierley’s. Under this, Brierley’s had undertaken not to lift its holding in Lane Walker to more than 30 per cent of the total shareholding. Brierley’s announcement to the Stock Exchange yesterday revealed that it had already acquired 14.4 per cent of Lane Walker by “private treaty” for $6.05 million. Lane Walker is at present the target of the Aucklandbased Chase Corporation, Ltd, which is well on the way towards achieving its desired 20 per cent stake.

The Wellington sharebroker, O’Connor Grieve and Company, reported that it had acquired a further 21,879 shares in Lane Walker on behalf of Chase Corporation at 120 c yesterday. Mr Rudkin denies that Brierley’s is a white knight (ally). Lane Walker and Brierley’s had an association through each owning half of Bing Harris, Ltd, since 1982, he said. Under the Brierley agreement, Lane Walker would take full ownership of Bing Harris, which has six garment factories and a halfshare in a new carpet manufacturer, KENCO. Lane Walker and Brier-

ley’s had agreed that the latter could stand in the market to take its shareholding to not more than 30 per cent of Lane Walker. Two Brierley directors will join Lane Walker’s board. Lane Walker would marshal the Brierley textile interests in New Zealand, Mr Rudkin said. Brierley’s has taken a key holding in several Christchurch firms: Cyclone Industries, Mason Struthers, Whitcoulls, Beaths (which it merged with D.1.C.), and Aulsebrooks. The firm also has a significant interest in Williamson Jeffery, Ltd, the Christchurch-based printer.

The LWR link with Brierley will mean something of a home-coming for the chief executive of Brierley Investments, Ltd, Mr Bruce Hancox. He began his working career with LWR, and qualified as an accountant while there. He left for Aulsebrooks, where he joined the Brierley empire. LWR employs about 2000 people, the bulk of them in Christchurch, although it has factories in Auckland and many rural parts of New Zealand.

Mr Peter Rudkin said last evening that the harder times for manufacturers, with the partial loss of export subsidies, the higher New Zealand dollar, and high interest rates, were not a factor in the Brierley link.

Discussions had been continuing for some time, and had been interrupted by the Chase bid. ,

A major textile company needed more financial strength than could be provided by family shareholding, he suggested. Apart from Brierley, the major holdings will be Chase, the family interests, and the AMP Insurance.

Mr Rudkin described the Brierley interest as a longterm commitment

LWR has in recent years been an innovative manufacturer, with its Canterbury range of leisurewear being marketed in a number of countries.

Rugby jerseys have been the centre of this export drive. After early success, the company had some difficulty with American distributors having their own copied brands made. This has been partly countered by LWR setting up its own distribution outlets, and negotiating licensing agreements. The Canterbury operation is now on the rise again. Mr Rudkin has spoken recently of some of the frustrations of a Christchurch-based textile operation, including high energy costs, and the

absence of a major financial sector in Christchurch. Textile manufacturers will be among the hardest hit by the Douglas moves to a freemarket economy with less protection from overseas competition.

Canterbury’s sales for the 1984-85 year were SI33JM on total tangible assets of 5104.4 M. Earnings a share were 20c, and the average return on ordinary shareholders’ funds was 115 per cent.

In a statement to the Stock Exchange, LWR said it had had a close association with Brierley since 1982 through the joint ownership of Bing Harris and Company. Since March of this year, discussions have been taking place to determine the future shareholding of that company and, in August, LWR assumed full management responsibility for its operations. The outcome of discussions was that, subject to the approval of the Commerce Commission and shareholders, LWR will acquire, for shares, all the capital of Bing Harris at present held by Brierley. “In addition to this, the directors of LWR have arranged for BIL to acquire additional shares in LWR st that the total BIL shareholding, which by undertaking wil not exceed 30 per cent, car nevertheless be of sufficient significance to stabilise the present sharemarket uncertainties.”

The directors believed that this was in the best interests of LWR shareholders.

The understanding reached with Brierley was that it would be a long-term holding aimed at consolidating and extending the LWR involvement in the garment and textile industry. “Concurrent with this, Brierley will reassess its other New Zealand textile interests,” the statement said.

LWR will therefore take the lead in all other textile and apparel developments where Brierley Investments, Ltd, are involved.

The structure and staffing of both Bing Harris and LWR will remain unchanged.

Despite high interest rates, the phasing out of export tax incentives, and the strong New Zealand dollar, LWR looked to increased earnings a share this year.

“Earning potential from Bing Harris should ensure that these earnings a share will not be diluted by the share issue to Brierley Investments,” the directors said.

The full ownership of Bing Harris brought a greater concentration into the domestic apparel industry and a 50 per cent interest in the recently established KENCO carpet manufacturing group, with substantial plants in both New Zealand and Australia, the statement said.

A meeting of shareholders will be called in November to approve the issue of shares to

The outcome of the BrierleyLWR agreement is subject to the consent of the Commerce Commission and LWR shareholders.