Sale of Bonar Yarns
Low & Bonar Group, the international performance materials group with leading positions in niche industrial markets (“Low & Bonar”), has announced that it is to sell its artificial grass yarns production business (“Bonar Yarns”) to the Mattex Group. The Mattex Group is a leading global player in the production and supply of carpet backing solutions for the carpet industry and has also built a leading global position in the supply of grass yarn.
The transaction will consist of the sale of Bonar Emirates Technical Yarns Industries LLC, Bonar Yarns’ Abu Dhabi-based grass yarns production facility, alongside the main production assets and associated trade working capital of the grass yarns business in both Europe and the United States. Mattex will not acquire Low & Bonar’s Dundee factory. This facility will be retained by us and continue to provide the base for Low & Bonar’s carpet yarn manufacturing business.
The sale is expected to close by no later than 31 August 2016, but it is subject to the fulfillment of a number of conditions, including the satisfactory completion of an information and consultation process with affected employees within Bonar Yarns. The conditions to completion of the sale must be met (or waived) by no later than 31 August 2016, after which either party may terminate the sale agreement if those conditions are not met or waived. As a result, the sale of Bonar Yarns as outlined in this letter is not certain to take place. However, we are writing to you now to inform you about the proposed sale and its likely future impact on your relationship with Bonar Yarns and your ongoing requirements for yarns to support your business.
Rationale of the sale
Bonar Yarns has undergone extensive restructuring in recent years and is now profitable with improving operating margins. Despite these measures, the returns to Low & Bonar from Sports & Leisure remain low when compared with its other businesses and the potential for significant further improvement is limited in the near term. As such, the disposal is in line with our stated aim of achieving and maintaining at least 10% operating margins in all our global business units and exiting businesses unable to reach that threshold as part of Low & Bonar.
The sale, and the arrangements described in this letter, will affect only our grass yarns business and not our carpet yarns business, which will continue as part of Low & Bonar.
The current period/Post sale
Although we have agreed to sell Bonar Yarns as outlined in this letter, we will not do so until the conditions referred to above are satisfied – in particular, we must consult with affected employees as to how the transaction will impact them.
Customer service: orders
Prior to completion of the sale, all orders will continue to be fulfilled by Bonar Yarns as normal. You should continue to direct all queries regarding new and existing orders to us; new orders to be placed prior to closing should be sent to Bonar Yarns, not to Mattex. Business will continue as normal until such time as the sale closes. At closing, all open orders will be transferred to Mattex for fulfilment – although, as Mattex will purchase the existing stocks of inventory and raw materials from us, your open orders will be fulfilled by our yarns in the short term despite the sale. As Mattex is purchasing our Abu Dhabi production facility and equipment and will have access to Low & Bonar intellectual property in respect of artificial grass yarn production, we expect that they will continue to supply you with high-quality yarns into the future.
Prior to completion of the sale, all invoices received from Bonar Yarns should continue to be paid in the normal way in accordance with the instructions on the invoice. Any invoices which remain unpaid at closing will be assigned to Mattex for collection, and new contact and payment details will be sent to you as soon as possible after the sale has completed. From that date, your trading partner will change and Mattex will inform you about any new arrangements.
Our customer service arrangement will remain in place until closing. Upon closing there will be changes in arrangements and details of those new arrangements will be sent out to you. Customer service will no longer be carried out in Dundee once the business is transferred to Mattex.
Guarantee/warranty obligations for all products sold prior to closing will remain with Bonar Yarns. However, we will be working with Mattex to resolve these.
If the sale does proceed, then there may be some changes to the employees currently working in the grass yarns business although this is a matter on which we and Mattex need to consult with relevant staff and their representatives over the next few weeks. Until such time as the transaction closes, all of our staff will remain available to you to assist you with your on-going requirements.
We do not know exactly when the sale of our business will finally close, but it is expected to be by 31 August 2016 at the latest. As set out above, certain conditons need to be met for it to close, and so it is not guaranteed to happen as outlined in this letter. We will write to you again to inform you that the sale has closed, or that it will not proceed as planned, as soon as we have further information.
Until such time, we thank you for your consideration and understanding during this period of uncertainty. Our staff are available to answer any questions you might have.
*For further information please contact Jan van Boldrik, Global Business Director Sports & Leisure, +31 653 405 993, firstname.lastname@example.org or Matthew Smallwood, Managing Partner Instinctif, +44 207 457 2005, email@example.com.
The Mattex Group has been producing primary and secondary carpet backings for the carpet industry worldwide since 1995. The Group has significantly expanded its presence in artificial grass yarn and is now a leading player. Most recently, it has established operations for the supply of high tenacity fibre and woven and nonwoven geotextiles. The success of the Mattex Group has been underpinned by offering value-added products to its global customer base, using its flexibility to customise offerings in order to improve the performance of its customers’ products. The core competency of the Group lies in its proven, leading-edge technologies and expertise in materials sourcing, extrusion, weaving, tufting and needle-punching.