Dan River acquired by Indian firm GHCL

By Staff -- Home Textiles Today, 1/5/2006 10:14:00 AM

DANVILLE, Va. — Gujarat Heavy Chemicals (GHCL) has purchased 90 percent of Dan River stock for $17.5 million plus the assumption of $76 million in debt, making the deal valued at about $93.5 million.

The deal became effective Jan. 2 and GHCL will effectively acquire the remaining Dan River shares in about 30 days’ time. Key to the acquisition, per GHCL, is the company’s ability to cut losses and integrate its own low-cost sourcing capabilities.

A recent filing with the Bombay Stock Exchange said the equity cost will be funded through recently concluded FCCB (Foreign Currency Convertible Bond) issue proceeds, while the existing debt will be refinanced.

“It’s a good thing,” Barry Shea, Dan River’s president & CEO, told HTT this morning. “They have a vision of putting together U.S. marketing and design with low-cost Asian manufacturing. They bring a strong balance sheet and the ability to become more efficient. They are very smart, knowledgeable people who are in textiles, chemicals, call centers, etc. Their vision for us is to become bigger and better.”

Meanwhile, GHCL is currently in the process of expanding its spinning capacity from 85,000 spindles to 140,000 spindles in the next two years. It is also currently completing a state-of-art manufacturing facility at Vapi, India that is slated to start production by March. After this expansion, GHCL will become the first company in India to have integrated production facilities and will rank in the top three home textiles players in that country.

Dan River has about $250 million in annual volume, with a sales and distribution network that caters to such retailers as JC Penney, Linen ‘n Things, Wal-Mart and Bed, Bath & Beyond.