Byline: Valerie Seckler

NEW YORK — St. John Knits said Thursday it is going ahead with plans to consolidate four of its eight production and administrative facilities in Irvine, Calif., into one new facility there.
To this end, the marketer and retailer of women’s daywear, eveningwear and sportswear has signed a partnership agreement with Varian Associates, a California company.
Under the agreement, Varian will contribute property valued at about $8 million, consisting of a 161,000-square-foot building and land, plus some $500,000 in cash.
St. John will put approximately $3.5 million into the partnership, most of which will be used for improvements.
In addition, the property is subject to an existing loan of $8 million. It will be refinanced by the partnership and the existing debt will be retired.
The cash contributed by Varian will be applied to the property’s refinancing as well as the costs of the deal. Roger J. Ruppert, senior vice president of finance and chief financial officer, declined to disclose the charge St. John would take as a result of the deal, but said it “would not be significant.”
“Historically, the company’s grown about 20 percent a year,” noted Ruppert. “This is a move to stay on track. I don’t think the company plans to accelerate its growth.”
The property is at 2722 Michaelson Ave., near St. John’s existing facilities. It will be used to house corporate offices, a design center, and sales and administrative staff, as well as some production facilities. The company anticipates the building will be ready for occupancy sometime between May and November.
“It’s [also] a logistics move to get more people under one roof,” said Randy Thompson, corporate controller. “It will give us more space to expand.”
Presently, the firm operates its eight facilities within a two-mile radius of one another. No layoffs of the firm’s 2,300 employees are expected.
Upon formation of the partnership, St. John will execute a 15-year lease with Varian, currently the property’s sole owner; the lease will also include options to extend the term for an aggregate of 15 years, the company reported. The value of the lease is roughly $21.2 million.
In another development, St. John has signed a letter of intent to lease from a third, unrelated party a property adjoining the new facility that includes a 120,000-square-foot building to be used in connection with the foregoing consolidation and planned expansion. The name of the party could not be learned.
Based on current negotiations, St. John said, this facility would be leased for seven years, with options to extend the lease. Ruppert said the rent would be $36,000 a month.
— Fairchild News Service

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