Tarrant Acquires Twill Facility in Mexico
Los Angeles-based private-label denim maker Tarrant Apparel Group is expanding its south-of-the-border operations.
The publicly held company, which reported revenues of about $330 million in 2001, recently announced that it has acquired a fully vertical twill factory in Mexico.
The deal between Tarrant and Trans Textil International calls for the payment of $4 million in cash, with 3 million new shares of common stock of Tarrant, plus 25 percent equity stake in Tarrant’s subsidiary, Tarrant Mexico S. de R.L. de C.V.
The sale was brokered by Inmobiliaria Cuadros, S.A. de C.V. (“Cuadros”).
“[The acquisition] marks the completion of our integration strategy and we are pleased with Trans Textil’s success in developing this highly efficient, state-of-the art facility,” explained Gerard Guez, Tarrant founder and chairman.
Four years ago, Trans Textil was commissioned by Tarrant to construct and develop the plant, located in Tlaxcala, Mexico.
Trans Textil intended to purchase the plant’s manufacturing equipment from Tarrant and entered into a production agreement that gave the latter company “first right” to all production capacity of the twill mill. “The agreement came with an option for Tarrant to purchase the facility and discontinue the production agreement with Trans Textil through September 30, 2002,” according to a company statement.
Part of the acquisition calls for the cancellation of certain notes and accounts receivables owed to Tarrant by Trans Textil, said Guez.
The move coincides with the recent promotion of Eddy Yuen from president of Tarrant Mexico to chief executive officer of Tarrant Apparel Group.
Last month the company replaced its line of credit with Hong Kong and Shanghai Bank with a $25 million cash infusion from United Parcel Service Capital Global Trade Finance Corp. The agreement between the companies also includes distribution and logistical support.
Tarrant Apparel Group’s net sales fell 11 percent to $160.5 million for the six-month period ending in June.
The purchase of the facility should be completed by early next year, said Guez.
