Innovo Group, Inc. to Acquire Knit Apparel of Azteca Production International, Inc.
Azteca¹s Knit Division designs, produces and markets knit apparel products for private label and retail customers such as Tommy Hilfiger, Calvin Klein, Express, Bongo, American Eagle and Sears. The Knit Division¹s product line includes but is not limited to women¹s and men¹s fashion and basic t-shirts, golf shirts and sportswear. For the last two fiscal years, the Knit Division has averaged net sales of approximately $14 million.
Under the terms of the agreement the Company, through its newly formed subsidiary Innovo Apparel, Inc. (³IAI²), will purchase assets of Azteca¹s Knit Division in a two-phase transaction. Pursuant to the first phase of the transaction (³Phase I²), the Company will purchase the Knit Division¹s customer lists, the right to manufacture and market all of the Knit Division¹s current products, non-compete and non-solicitation agreements and other intangible assets associated with the Knit Division. As consideration for the Phase I assets, the Company will issue to Azteca, 700,000 shares of Company common stock and promissory notes in the amount of $3.6 million. Furthermore, IAI, as of the Phase I closing date, will hire certain employees of the Knit Division to assist in the management of IAI.
The second phase (³Phase II²) of the transaction calls for the Company to purchase the inventory of the Knit Division as of October 31, 2001 for cash, with the consideration not exceed $3 million.
The Phase I transaction is scheduled to close upon satisfaction of customary closing conditions, which the Company believes will be obtained in the immediate future. Phase II of the transaction is scheduled to close upon the completion of the October 31, 2001 physical inventory count and customary closing conditions.
Jay Furrow, President of Innovo Group Inc., commented that ³The acquisition of the Knit Division is a very exciting development for the Company. As we continue to experience positive results within our existing divisions, the creation of Innovo Apparel, Inc. will expand our presence in the apparel and fashion arenas and will further strengthen the Company¹s ability to increase revenues and profitability. The purchase of the Knit Division fits well into our strategy of growth and diversification through strategic acquisitions and we believe the Knit Division will have a very positive impact on the Company going forward.²
About Azteca Production International, Inc.
Azteca, headquartered in Los Angeles, CA, designs, manufactures and distributes internationally recognized brand name denim, twill and knit apparel products for brand name licensees and branded retailers such as Tommy Hilfiger, Calvin Klein, Chaps, Nautica, Bongo, American Eagle and Express. Since its inception Azteca has developed into a vertically integrated manufacturer and into one of the top suppliers of denim and knit apparel products in the United States.
About Innovo Group Inc.
Innovo Group Inc. through its subsidiaries Innovo Inc. and Joe¹s Jeans, is a sales and marketing organization designing and selling craft, accessory and apparel products to the retail and premium markets. The Company¹s craft products include canvas and denim totebags and aprons. The Company¹s accessory product line is comprised of such products as licensed and non-licensed backpacks, totebags, waist packs and handbags. The Company¹s apparel products consist of women¹s high-end denim jeans and knit shirts featuring the Joe¹s brand. For more information, visit the company web site at www.innovogroup.com.
Statements in this news release which are not purely historical facts are forward-looking statements, including statements containing the words believe", "estimate", "project", "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are based upon information available to Innovo Group Inc. on the date of this release. Any forward-looking statement inherently involves risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace, successful implementation of its strategic plan, the extension or refinancing of its existing bank facility and the restrictions any such extension or refinancing could place on the Company, the ability to obtain new financing from other financing sources, the ability to generate positive cash flow from operations and asset sales, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. Readers are cautioned not to place undue reliance on forward-looking statements.
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Innovo Group Inc.