JERUSALEM — After financial uncertainty, seamless apparel and textile manufacturer Tefron has signed a memorandum of understanding with its principal lenders to extend and expand its line of credit.
The company has also hired industry veteran Amit Meridor as its new chief executive officer.
Controlled by First Israel Mezzanine Investors Fund and Mivtach Shamir Holdings Ltd., Tefron had received a three-week extension of credit until the end of December from Israel’s three largest banks in order to stay in business. The lenders, Bank Hapoalim, Bank Leumi Le-Israel and Discount Bank, provided Tefron with $29 million in credit at the end of September.
Tefron’s troubles date to last year, with a $23.5 million revenue loss of orders from Victoria’s Secret, one of its largest and longest-standing customers, which decided to move some production to India. Tefron ended up reporting an $8.3 million net loss for the third quarter of 2009 and 45 percent loss in revenues to $21 million.
The agreement, signed with Banks Leumi, Discount and Hapoalim, offers the continuation of the current $28.95 million line of credit and adds $1.8 million for a total of $30.75 million. It also calls for a minimum addition of $4 million in equity investment, which the company’s major shareholders have committed to making.
“We have removed the last element of doubt about Tefron’s financial picture,” said company chairman Jacob Gelbard. “This closes the chapter on what has clearly been a challenging month for our company.”
Meridor succeeds Adi Livneh, who left the company in November. He has 15 years in the textile industry, working for NILIT Fibers Ltd., an Israeli manufacturer of high-quality yarn and fibers. Meridor also has extensive managerial experience in business development and company turnaround programs, and worked closely with Tefron and other seamless garment producers at NILIT.
Tefron became a leader in seamless apparel manufacturing technology after investing more than $100 million in machinery. The company has long had a roster of well-known brands, including Patagonia, Victoria’s Secret, Calvin Klein and Lululemon Athletica. It was a key player in Nike’s 2008 marketing plan before the Beijing Summer Olympics, as the manufacturer behind its NikePro seamless garments.
The New York Stock Exchange-traded company started out manufacturing underwear for the Israeli army in the Seventies, and used technology and vertical production to revolutionize its textile business, eventually outsourcing and establishing manufacturing facilities in Israel, Honduras, Jordan and the U.S.
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