Consumers Distributing's parent plans spin-off of Singer division - Consumers Distributing Company Ltd.'s owner Semi-Tech Global Ltd., Singer Co

Discount Store News, July 8, 1991

HONG KONG -- Semi-Tech Global, parent of U.S. cataloger Consumers Distributing, plans to partly spin off its Singer appliance manufacturing and retialing subsidiary to help pare down Global's debt while funding Singer's expansion.

Global didn't consider taking the CD subsidiary public, an executive said, because the Singer name is recognized internationally, while the cataloger is only known in the United States and Canada. Selling Singer stock worldwide is part of Global's drive to become an international trading company, sourcing and selling merchandise everywhere (see DSN, June 3, page 4).

The cataloger's president, John Pflug, reports to Singer president Iftikhar Ahmed, but the Singer U.S. operation reports to Pflug.

Besides its Singer and CD subsidiaries, global owns a 20% interests in Tomei, a consumer electronic maker based in Hong Kong. Global and Singer will each own 25% of a Hong Kong holding company due to acquire a 20% interest in Emerson Radio Corp. based in North Bergen, N.J.

Singer, based in the Netherlands Antilles, is the successor to the Singer Sewing Machine Co. and Singer Europe, which runs appliance stores in Latin America, Europe, Africa and Asia. Global purchased Singer for $269 million in 1989.

Singer, a $1.7 billion business, produces sewing machines and distributes consumer electronics, small electrics and major appliances under the Singer brand in over 100 countries through 1,000 company-owned stores and over 14,000 other outlets like mass merchandisers, franchised dealers and door-to-door salesmen. Its pro forma earnings last year year were $43.3 million.

The Singer spin-off involves selling 11.7 million shares in the United States and 3.9 million shares internationally at an estimated $16 to $19 a share, raising $250 million to $296 million. Singer has issued 7 million new shares, while Global is offering 8.6 million existing shares.

Singer would receive $112 million to $133 million, using the proceeds for working capital and expansion. Global would use its proceeds, $138 million to $163 million, to reduce its indebtedness and redeem Singer's preferred shares. The total nominal value of Singer's preferred stock is about $95 million (HK is $740 million), while Global's bank indebtedness in approximately HK $1 billion (US is $128 million).

Following completion of the offering, which is being made by syndicates led by Merrill Lynch & Co., there will be 49.4 million shares of Singer outstanding, with Global owning 68.5%. Global, whose shares are traded on the Hong Kong Stock Exchange, is 40% owned by International Semi-Tech Microelectronics of Markham, Ontario, whose stock is traded on the Toronto Stock Exchange. Singer intends to have its shares listed on the New York Stock Exchange.