Xtep Publicizes Strategic Divestiture of K-Swiss and Palladium and Enhanced Monetary Building
HONG KONG, May perchance just 9, 2024 – (ACN Newswire) – Main PRC-essentially based fully mostly legit sportswear enterprise Xtep World Holdings Restricted (the “Firm”, along with its subsidiaries, the “Community” or “Xtep”) (Inventory code: 1368.HK) nowadays provided the strategic divestiture of its wholly owned subsidiary KP Global Investment Restricted (“KP Global”), which owns the K-Swiss and Palladium manufacturers, as well to a chain of financing instrument restructuring workout routines aimed at optimizing its portfolio and strengthening its core trade operations.
Strategic Divestiture and Privatization of Underperforming Assets
Xtep has entered true into a definitive settlement with its controlling shareholder Ding Shui Po and his family for the sale and privatization of KP Global. The transaction, valued at US$151 million, is fixed with the e book tag of KP Global as at 31 March 2024. This switch is designed to carve out the persistently underperforming section from Xtep’s portfolio, allowing the Firm to concentrate its sources on creating its highly worthwhile manufacturers – core Xtep price, Saucony, and Merrell.
Mr. Ding Shui Po, Chairman and Chief Executive Officer of Xtep World Holdings Restricted, commented, “The decision to divest and privatize the KP Global adopted an exhaustive overview of our trade strategy and financial targets. After buying the KP Global for US$260 million in mid-2019, we confronted three years of pandemic-linked disruptions and an financial slowdown in China, which ended in diminished particular person spending and adversely affected the KP Global’s efficiency. This strategic divestiture will dispose of the continuing affect on Xtep’s profitability and money flows attributable to the loss incurred by the KP Global. It is most frequently designed to pork up shareholder tag, coupled with a proposed special money dividend distribution of US$151 million, pending shareholder approval on the impending Unprecedented Overall Meeting.”
Enhanced Monetary Building and Future Negate Possibilities
Alongside side the divestiture, Xtep has negotiated a supportive device with Hillhouse Capital (“Hillhouse”). This entails the redemption of a US$65 million convertible bond issued by KP Global to Hillhouse in 2021, and the issuance of a brand contemporary, 6-twelve months HK$500 million convertible bond by Xtep at an annual coupon price of three.5% with a conversion tag of HK$5.5 per portion to Hillhouse. Additionally, Hillhouse will retain an strategy to repurchase 20% of KP Global’s shares for US$65 million interior the next five years, reflecting its self belief within the lengthy flee possible of the manufacturers below non-public ownership.
To streamline the financial device, KP Global will misfortune an 8-twelve months convertible bond valued at US$154 million to Xtep. This bond corresponds to KP Global’s total accumulated losses since the acquisition in 2019 blended with the price of the capital investment and dealing capital as of the cease of March 2024. It ingredients an annual hobby price of three.5%, which is fixed with the price that Xtep provided to Hillhouse. Xtep is granted the excellent, over the next eight years, to rework this bond true into a 30% equity stake in KP Global.
These financial maneuvers are structured to stabilize Xtep’s financial health by optimizing debt construction and strategically allocating capital in opposition to worthwhile development alternatives. The restructuring will pave the formula for KP Global’s possible success as a non-public entity, while peaceable allowing Xtep and its shareholders to be taught circuitously from future successes.
Unlocking Cost and Specializing in Core Strengths of the Official Sports Segment
The special dividend coupled with Xtep’s strategic reorientation bring immediate financial advantages to shareholders and sets the stage for sustained profitability and development. The restructuring can even lead to an elimination of losses incurred by KP Global at Xtep, with an expected enchancment in profitability over the next two years and previous. The trade construction will seemingly be streamlined, specializing in working: the core Xtep price targets the mass market; Saucony caters to the excessive-cease subtle customers; and Merrell specializes in path working and exterior actions, bettering synergy among these manufacturers.
Besides, the get money flows generated by the core Xtep price will reinforce the lengthy flee pattern of both Saucony and Merrell. Additionally, if KP Global achieves success and manages to switch public independently, shareholders of Xtep will raise pleasure in KP Global’s achievements.
“We’re assured that these decisive actions will streamline our operations, pork up our profitability, and tag a stronger, extra centered Xtep. We’re laying the groundwork no longer excellent for restoration however for a brand contemporary a part of dynamic development,” added Mr. Ding.
About Xtep World Holdings Restricted
Xtep World Holdings Restricted (SEHK stock code: 1368) is a leading multi-price sportswear firm listed on the Essential Board of the Hong Kong Inventory Replace in 2008. The Community mainly engages within the tag, pattern, manufacturing, sales, marketing and price management of sports products keeping shoes, apparel and equipment for adults and youngsters. With a various price portfolio encompassing the core Xtep price, K-SWISS, Palladium, Saucony and Merrell to strategically goal the mass market, athleisure and legit sports segments, the Community has an wide global distribution network and better than 8,500 stores in Asia-Pacific, North The United States and EMEA.
Xtep is a constituent of the MSCI China Itsy-bitsy Cap Index and Dangle Seng Composite Index Series, and is an eligible stock below the Shanghai-Hong Kong and Shenzhen-Hong Kong Inventory Connect. For extra files, please visit Xtep’s corporate internet scheme: www.xtep.com.hk or scan the Community’s Wechat QR code.
Matter: Press begin summary
Provide: Xtep World Holdings Restricted
Sectors: Model & Apparel, Retail & eCommerce
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