Kiwi millionaire bids for control of LWR

By Geoff Senescall

A multi-millionaire New Zealand-born academic has uncloaked himself as the mystery suitor for the struggling listed apparel and textiles manufacturer LWR Industries.

David Teece - who holds a PhD in economics and currently resides in Berkeley, California - is the principal shareholder in CHL New Zealand, which yesterday bid 106c a share for the owner of the Canterbury clothing brand.

But anticipation that LWR's major shareholder, Brierley Investments, had finally found a buyer for the company, saw LWR's shares close at 120c. This is despite earnings woes from import competition and the impending loss of the All Blacks contract for its Canterbury brand.

CHL has already got Brierley's 63 per cent shareholding locked up at the 106c share price under an option agreement which stays open for two years.

But it wants to buy out the remaining LWR shareholders so it can properly restructure the asset. Christchurch lawyer Lindsay Lloyd, who is a director of CHL, said the price was realistic, especially given Brierley's acceptance. "There are several analysts' reports which put the LWR price under a $1," he said.

With Brierley's 30.79 million shares in tow, CHL will need to buy another 13.2 million shares to be able to activate the compulsory takeover provisions. Mr Lloyd would not say what CHL would do if it was unable to achieve that level. But both Brierley and CHL were of the same view that whatever happened, the LWR dividend offering shareholders a gross yield of 13 per cent would be axed.

Mr Lloyd said that LWR could not simultaneously support a dividend as well as expand sales. He believed the current $5 million dividend payout would be sufficient to drive the expansion.

The Canterbury brand would not be leaving Christchurch. Under CHL the brand would be further developed in Europe. CHL also wanted to reintroduce Canterbury to the North American market despite its difficulties there in the past.

CHL will be initially capitalised at $10 million once the offer goes unconditional. Around 90 per cent of that will be supplied by Mr Teece, who co-founded and listed on the New York Stock Exchange the economic consulting firm LEGG Inc. The company, which at the time of listing in 1997 had a market capitalisation of $US120 million, has subsequently been taken over.

The other two shareholders are Kenneth Klopp - the founder and former president and chief executive of outdoor apparel and equipment company, The North Face, and Christoper Woodward, who is a graduate of Berkeley and has many years of experience in the financial arena.

Both Mr Klopp and Mr Woodward have worked on several ventures in the outdoor products industry.