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Report: Luen Thai to sell company shares in IPO
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Posted on Jun 28 2004
Luen Thai, the parent company of Saipan’s Tan Holdings Corp., hopes to raise $100 million to expand its China operations, the U.K.-based Financial Times reported yesterday.
According to the report published in the Financial Times website, Luen Thai plans to sell 25 percent of the company in an initial public offering in Hong Kong, valuing the entire company at about $400 million.
Proceeds of the July listing will be used for building factories in China and buying machinery and equipment.
This move, says the report, comes in an effort by Luen Thai to prepare for next year’s elimination of the 30-year-old international quota system, under which the U.S. and Europe limited the amount of clothing that could be imported from any one country.
“The removal of the textile quota system is widely expected to lead to a substantial increase in U.S. and European imports from cheaper Asian countries, especially China. It would also benefit larger manufacturers such as Luen Thai as the fragmented industry is likely to consolidate after the end of the quota regime,” the Financial Times noted.
Luen Thai’s clients include Polo Ralph Lauren and Liz Claiborne.
However, the proposed listing, being arranged by BNP Paribas Peregrine, will have to brave the current poor sentiment towards IPOs in the territory, the news outlet said.
Investors, according to Financial Times, have become more selective in regard to new listings recently after some offerings failed to take off.
The news report cited China Shipping Container Lines and Ping An Insurance as two of the companies whose shares declined or staged a muted debut this month.
Founded on Saipan 20 years ago, Luen Thai produced more than 50 million garments last year with annual sales of about $540 million, the Financial Times said.
The company also expanded into supply chain management in recent years to provide logistic service for its customers.
The company and BNP Paribas Peregrine declined to comment.
