By  on June 1, 1994

MILAN -- Simint SpA said Tuesday it is selling its troubled U.S. subsidiary, Simint USA, to Ong Beng Seng, a Singapore financier and Armani distributor.

The announcement confirmed reports published here May 31 that such a deal was imminent.

Simint manufactures and distributes the Armani jeans line, and Simint USA operates the A/X Armani Exchange business.

Ong is a Simint shareholder and distributes Armani jeans and sportswear lines in the Far East and the U.K. Simint said its board approved the sale late Monday, although the offer was lower than they had hoped.

The board decided to accept Ong's offer to pay $12.6 million (20 billion lire) and shoulder the burden of some $24 million to $25 million (30 billion to 40 billion lire) in losses at Simint USA. The decision was taken in the interests of keeping future losses off the parent company's balance sheet and rapidly moving to a general restructuring, Simint said in a statement.

"The sale of Simint USA is the cornerstone of [Simint's] industrial and financial restructuring plan," according to a Simint spokesman in Milan.

A representative of the Ong business in London said Ong was traveling and unreachable and that he, himself, was unable to comment on the sale.

The Simint board also approved a three-year restructuring plan to wipe out its losses, bring its net assets to $4.4 million (7 billion lire) million) and pave the way for the company to break even by the end of the year, the spokesman said.

As reported, Simint has an accumulated loss of $115.8 million (184 billion lire) in the 10 months ended Feb. 28, due to losses at the A/X business and balance sheet writeoffs at the parent company. In addition, it will take a further loss of $32.7 million (52 billion lire) due to the sale of the U.S. subsidiary.

The combined losses will be wiped out through the use of reserves in the amount of $88.1 million (140 billion lire), share capital for $29.6 million (47 billion lire) and the deferral of credits by core shareholders Giorgio Armani and Milan investment bank Sige for a total of $35.2 million (56 billion lire).Of the latter, $32.1 million (51 billion lire) are credits Armani has agreed to defer to help bring Simint back to the black.

Simint also said it would restructure operations with the creation of a parent holding company, Simint SpA, and a wholly controlled industrial operating company, Simint Industriale SpA.

The restructuring plan, designed to streamline Simint's outsourcing network, is based on consolidated sales of about $125.9 million (200 billion lire), excluding any new license contracts it manages to conclude, the statement said.

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