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DOGI shareholders approve a capital increase of between 25 and 30 million

The capital increase will be used to finance the final phase of DOGI II and increase capacity in Sri Lanka; and to optimize the business in Asia and the group’s financial structure. The Board of Directors has submitted a plan for the optimization of resources in Asia which will help to improve the Group’s consolidated profit. The General Shareholders’ Meeting of DOGI, held this morning in El Masnou, has approved the capital increase submitted to vote by the Board

1st May 2008

Knitting Industry
 |  Barcelona

Knitted Outerwear, Intimate Apparel, Sports/​Activewear, Swimwear/​Beachwear

 

The capital increase will be used to finance the final phase of DOGI II and increase capacity in Sri Lanka; and to optimize the business in Asia and the group’s financial structure. The Board of Directors has submitted a plan for the optimization of resources in Asia which will help to improve the Group’s consolidated profit.

The General Shareholders’ Meeting of DOGI, held this morning in El Masnou, has approved the capital increase submitted to vote by the Board of Directors.

This appeal to the market, made in the course of the Meeting by the Company’s Chief Executive Officer, Karel Schröder, will be used fundamentally to (i) cover the financing of the final phase of DOGI II, (ii) meet the temporary financing needs of optimizing resources in Asia, (iii) finance the increase in production capacity in Sri Lanka and to (iv) optimize the group’s financial structure.

In his speech to the shareholders, Schröder assured that the capital increase would be carried out “in a very short time” by the Board of Directors and for an amount of between 25 and 30 million euros with a preferential subscription right for shareholders. Schröder has added that the members of the Board of Directors undertake, as a whole, to assure a significant percentage of the issue. The CEO has confirmed that the Company is in contact with different investors who have shown an interest in DOGI’s industrial project.

2008, “turning point”

Karel Schröder assures the shareholders that 2008 will be a “turning point” between 2 periods: one ending in 2007 noted for (i) high investments in strategic positioning, (ii) a significant deficit on operations, and (iii) major restructuring expenses. And a second period which will commence in 2009, and will be characterized by a totally opposite scenario: (i) small strategic investment needs as most of them have already been made, and positive results.

Plan for the optimization of production in Asia

The CEO of DOGI proposed to the General Shareholders’ Meeting to bring forward to 2008 the plan for the optimization of resources in Asia, initially planned for 2009. The Plan consists of concentrating DOGI’s production in ASEAN (Association of South East Asian Nations), a zone where DOGI currently has 2 production plants – in Thailand and the Philippines – in a single plant. For “clear economic, financial and strategic reasons”, Schröder indicated, production will be transferred from the Philippines to China and Thailand and, eventually, to Sri Lanka, as a consequence of the closure of the Philippines plant.

The closure of the Philippines plant is due to the constant loss of importance of the Philippines economy compared to the Asian economies taken as a whole, the unpredictable changes in the value of its currency, and the major lack of institutional support, leading to a constant abandonment of industrial companies. Schröder has emphasized that the closure of the plan will have “clear, immediate and significant advantages” for the Group: (i) there will be no need to make investments totalling 5.8 million euros in the Philippines, considered in the strategic plan, (ii) the Group’s consolidated profit will improve by 4.8 million euros over the 2008-2010 period and (iv) minimal investments will be required in Thailand and China to absorb the production transferred from the Philippines. Karel Schröder has highlighted that, although the process of optimizing production in Asia will require temporary financing, the overall process of divestment in the Philippines is clearly one of “positive cash flow”. In this regard, Schröder clarified that, in the 3-year outlook covered by the Strategic Plan, the realization of non-current and current assets in the Philippines more than covers the external debts and other employment and legal obligations the plant may generate, as well as the investments to be made in Thailand and China.

The Dogi group is a world leader in elastic fabrics, with a market share of over 25%. The Spanish-based multinational is the only supplier in the industry with a global presence. It develops, produces and markets innovative products for the underwear, swimwear, activewear and outer clothing markets. The group has over 2,000 employees and a production capacity of 40 million metres a year, which is distributed through its three brands: DOGI (creative elastic fabrics), PENN ELASTIC (specialist elastic fabrics) and EFA (functional elastic fabrics).

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