Austrim Delivers Boost To Textiles
The Age
Monday September 30, 1996
Austrim, Mr Alan Jackson's ambitious expansion vehicle, yesterday backed Australia's struggling textile industry by buying a local fabric manufacturer for $77 million.
The Melbourne-based CDA group - previously a family-owned business - specialises in the manufacture of clothes fabrics as well as fabric for car interiors. The $77 million purchase price includes about $9 million worth of trade creditors and liabilities as well as $14 million for properties from where CDA operates.
CDA employs about 410 people, and earnings before tax for the year to 30 June were about $11 million on turnover of about $77.5 million.
It was Austrim's second major purchase since Mr Jackson took the helm. He said Austrim could quickly become a top-100 company.
In May Austrim bought AH Plant Group, a road-plant hire and fleet management business, for $45 million. This week's CDA purchase was paid for from the capital left over from an $80 million rights issue raised before the AH Plant purchase, as well as from bank borrowings.
Mr Jackson, Austrim's chairman and chief executive, said yesterday the company's balance sheet could withstand another similar-sized purchase this financial year.
Mr Jackson said there was no dearth of acquisition targets on the market, with Austrim particularly interested in the manufacturing sector.
"In my view there was a lot of smaller companies established in the 1970s or '80s that have grown to be very good companies with strong technology and a strong profit record, and where the owners are starting to get tired and look for a new home. And I think we are the people to offer it," he said.
Mr Jackson, formerly the chairman of BTR Nylex, was upbeat about Australia's manufacturing sector's future. "You have got to know what you are about, you have got to have technology, you have got to have investments in state-of-the-art equipment, but I have got to say we know a little bit about manufacturing," he said.
He said that while he expected to remain the company's chairman for at least four years, he intended to stand down as chief executive before the end of next year, when the company would be well established.
Mr Richard Pratt, Mr Kerry Stokes and Mr Jackson each own about 11 per cent of Austrim.
Austrim, which has a market capitalisation of $285 million, finished seven cents lower at $1.98 yesterday, but has climbed steadily since 1 February when its scrip was just $1.34.
© 1996 The Age