INNERWEAR MAKER TEFRON PLANNING IPO

NEW YORK — Tefron Ltd., an Israeli manufacturer of intimate apparel, primarily for Victoria’s Secret and Warnaco Group, plans to sell 5 million shares in an initial public offering.
Tefron said it currently supplies most of the cotton women’s briefs for Warnaco’s licensed Calvin Klein line. Tefron also sells to Banana Republic, Cacique, Gap and Sara Lee’s Playtex Apparel division.
The company, based in Bnei-Brak, plans to sell 3.3 million shares; investors in the firm will sell 1.7 million shares.
Proceeds to the company, at a price projected at $14 to $16 a share, should be around $45 million.
The money will be used to purchase machinery for a new factory, repay all outstanding debt, finance acquisitions or new technology and form joint ventures.
Proceeds also will be used to pay a $17.5 million dividend to existing shareholders.
In the year ended Dec. 31, Tefron’s earnings rose to $13 million from $4.3 million. Sales gained 45.9 percent to $63.1 million from $43.3 million.
Victoria’s Secret accounted for 48.2 percent of sales last year, and Warnaco Group, for 42.3 percent.
Tefron said it started selling briefs to Victoria’s Secret — a subsidiary of Intimate Brands, which is majority-owned by The Limited Inc. — in 1991, and has since expanded to loungewear, nightwear and bodysuits. Limited owns a 42 percent stake in Macpell, a Tel Aviv firm that owns 51 percent of Tefron.
Macpell plans to sell 850,000 shares in the offering, after which its stake will drop to 32 percent.
Tefron said its growth was helped by a move in 1990 to increase substantially the computerization of its sewing and cutting operations, which has resulted in higher quality and consistency and reduced labor costs. Tefron noted the manufacture of intimate apparel has historically been labor-intensive.
The company said it benefits from being in Israel, which it points out is the only country in the world that has free-trade agreements with the United States, Canada and the European Community. Its main manufacturing facility is in Segev.
Growth is expected to come from broadening its lines to current customers, establishing new customers and introducing new products, such as men’s underwear.
Last year, women’s briefs accounted for 58.4 percent of sales; tank tops, 9.3 percent; loungewear, 6.9 percent; nightwear, 5.6 percent; bras, 5.2 percent; T-shirts, 4.1 percent, and bodysuits, 3.8 percent.
Boxers, leggings, cycling shorts and men’s briefs brought in the remaining 6.7 percent of sales.
Sigi Rabinowicz, Tefron’s chief executive officer since 1990, had been general manager at Kortex Hosiery Mills in Australia before joining Tefron in 1977.
In the half ended June 30, Tefron’s earnings dipped 16.4 percent to $5.5 million, while sales gained 19.8 percent to $36.3 million.
Tefron blamed the profit decline primarily on increased investment in its Hi-Tex manufacturing process, increased sales of lower-margin loungewear and nightwear lines and taxes of $1.9 million in the latest period compared with none a year ago.

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