The heavily loss-making Northern Ireland textiles group, Lamont, plans to reinvent itself as an investment holding company, aiming to reduce its exposure to the British textiles industry.
Chief executive Mr Dick Milliken said part of this restructuring might involve joint venture or partnerships with other British and European textile companies which would increase the volumes passing through Lamont's various plants and put them back on a sounder financial footing. Once this is achieved, then Lamont could look at various options including the sale of profitable assets, investment of the proceeds in other areas or conceivably distribute cash to shareholders.
News of the planned change came with Lamont's results for 1999 which show operating losses of £5.9 million sterling (€9.4 million) and pre-tax losses of £15.7 million. Shareholders will receive no dividend and chairman Mr Frank Cushnahan holds out little hope for any dividend in the short term.
"In recognition of the poor trading and the current level of borrowings, there can be little prospect of a dividend payable until such time as there has been a material improvement in the company's performance," Mr Cushnahan states. Lamont shares were unchanged on 13p sterling in London - five years ago they were trading as high as 360p sterling.
Part of this restructuring will see Lamont exit the carpets business and Mr Milliken expects to complete a deal shortly. This will involve the break-up of the carpets business and a sale of the plants in Newtownards and Ballygowan, based on their underlying value as property assets. "It's a break-up, not a trade sale," Mr Milliken said.
Completing this deal is one condition attached to ongoing support for the group from Lamont's bankers, as is the company's move away from its dependence on a British textiles sector which has been devastated by cheaper imports and sterling's strength.
The restructuring to an investment holding company will take place over the next six to nine months. "Our principal objective is to create an investment holding company with a clearly defined strategy to substantially reduce Lamont's exposure to the UK textile industry, which continues to be ravaged by the strength of sterling, significant outsourcing to low-cost operators and obvious sectoral over-capacity manifest in the European and global marketplaces," said Mr Cushnahan.
Lamont's problems are made clear by its 1999 results which show a sharp drop in sales from £62.9 million to £46.3 million and net debt of around £30 million. The results also include a restructuring charge of £12 million against the withdrawal from the carpets and carpets yarns business.
Trading losses were £5.9 million. These were due to a failure to generate sufficient level of turnover as a result of over-capacity in the British business and the impact of low-cost manufacturers in Turkey, Sri Lanka and India.
