Innovo Group Inc. Completes Acquisition of Phase I Assets of Azteca Knit Apparel Division

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Innovo Group Inc. Completes Acquisition of Phase I Assets of Azteca Knit Apparel Division

Knoxville, TN, August 30, 2001 – Innovo Group Inc. (NASDAQ: INNO), a sales and marketing organization designing and selling craft, accessory and apparel products to the retail, specialty and premium markets, announced today that the Company has completed the first phase of the acquisition of certain assets of Azteca Production International, Inc.'s (“Azteca”) knit apparel division (“Knit Division”).

Through its newly formed subsidiary Innovo Apparel Inc. (“IAI”), the Company has purchased the Knit Division's customer lists, the right to manufacture and market all of the Knit Division's current products, non-compete and non-solicitation agreements and other intangible assets associated with the Knit Division (“Phase I Assets”). As consideration for the Phase I Assets, the Company has issued to Azteca, 700,000 shares of Company common stock and promissory notes in the amount of $3.6 million.

Jay Furrow, President of Innovo Group Inc., commented that “we are pleased to announce that we have successfully competed the first phase of the knit division acquisition. We now have before us the opportunity to leverage the existing strengths and maximize the tremendous untapped potential of the knit division. With its strong customer base and intellectual capital, we believe the knit division will play a key role in the Company's ability to increase revenues and strengthen the bottom line going forward.”

Azteca's 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 Division's product line includes but is not limited to women's and men's 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.

The second phase 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 second phase of the transaction is scheduled to close upon the completion of the October 31, 2001 physical inventory count and customary closing conditions.

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 Joe's Jeans, is a sales and marketing organization designing and selling craft, accessory and apparel products to the retail and premium markets. The Company's craft products include canvas and denim totebags and aprons. The Company's accessory product line is comprised of such products as licensed and non-licensed backpacks, totebags, waist packs and handbags. The Company's apparel products consist of women's high-end denim jeans and knit shirts featuring the Joe's brand. For more information, visit the company web site at

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.

For further information, please contact:,br> Donna Drewrey
Innovo Group Inc.