Aust buyer tipped for Line 7

Receivers cleared stock and the outlets are now closed. Photo / Brett Phibbs

Fabrics, textiles and homewares company Charles Parsons is expected to announce that it has bought the Line 7 brand.

The high-profile Kiwi sports and casual wear label went into receivership in July owing $5 million to unsecured creditors who are unlikely to be paid.

There has reportedly been strong interest in Line 7 with receivers KordaMentha issuing 57 information memorandums to potential buyers.

Australian-owned Charles Parsons operates in Australia, New Zealand, China, Hong Kong, Singapore and Fiji.

It manufactures fashion fabrics and garments for wholesale, sells linen, drapery and upholstery brands including Trelise Cooper Interiors, and has a technical division that makes performance industrial and outdoor textiles.

Line 7 made its name in quality sailing gear and had a long association with New Zealand's America's Cup teams.

It expanded into casual wear with 11 retail outlets, and also had an agricultural clothing division.

The receivers held a sale to clear stock and all the outlets are now closed.

Owner Ross Munro, who bought the company out of receivership 19 years ago, said it had been hurt by its foreign currency exposure and the recession.

He said the business didn't hedge itself against big falls in the New Zealand dollar, which had a significant impact on its margins last season.

As well its customers had been slow to pay their bills and the firm hadn't reacted quickly enough in cutting overheads, he said.

In its first receivers report KordaMentha said Line 7 had assets of $8.16 million including stock. It also had its brand and intellectual property.

It owed $8.08 million to secured and preferential creditors. This included $7 million plus $600,000 in foreign exchange contracts to the ANZ National Bank.

A number of the contracts were yet to close out and due to fluctuations in currency exchange rates the exposure had increased since the receivership, KordaMentha said.

There was an additional $4.98 million outstanding to other creditors. "While it is early in the receivership we do not anticipate that there will be funds available for distribution to this class of creditor," receiver Grant Graham said in the report.

Preferential claims to employees totalling $251,000 had been paid, as had a debt of $61,000 to Customs New Zealand.

Customs had attempted to have Line 7 liquidated over the debt.