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Bendon posts wider loss as merger nears

NZN 26/06/2017 Rebecca Howard

Underwear maker Bendon, owned by NBR Rich Lister Eric Watson, has disclosed mounting losses related to tax adjustments as a proposed merger with Nasdaq-listed Naked Brand Group draws nearer.

Bendon had previously disclosed 2016 sales of about US$100 million (NZ$137 million) in documents relating to the tie-up with the unprofitable Naked Brand.

However, Naked Brand's first-quarter report included more detailed information about the New Zealand firm's earnings, showing Bendon's net sales rose 8.7 per cent to US$105.7m in the year ended June 30, 2016, on improved selling conditions across all channels, although its bottom line deteriorated by US$6.2m with a wider net loss of US$16.3m.

This was largely as a result of a US$4.2m write-off of prior year tax losses and one-time deferred tax adjustments.

Naked Brand, meanwhile, reported a 1.7 per cent increase in net sales in the three months ended April 30 to US$460,000. However, its net loss for the first quarter of its 2018 financial year was US$3.2m versus a net loss of US$2.5m a year earlier.

Early this year Mr Watson announced plans to merge Bendon with New York-based Naked Brand in what will effectively be a reverse takeover, with the New Zealand-based manufacturer's shareholders set to end up owning 94 per cent of the enlarged entity.

At the time, the companies touted benefits of a merger as including Bendon's immediate access to US capital markets, Naked Brand's ability to leverage Bendon's distribution channels, and the elimination of duplicated supply chain and administrative costs.

Under the agreement, Naked Brand and Bendon will become wholly owned units of Bendon Group Holdings, a newly formed Australian holding company and the shareholders of Bendon and stockholders of Naked Brand will become the shareholders of that holding company, which will be listed on either the Nasdaq or the New York Stock Exchange.

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