Samsonite rejects multi listings

PUBLISHED : Friday, 03 June, 2011, 12:00am
UPDATED : Friday, 03 June, 2011, 12:00am


Samsonite International considered listing in the United States and Europe but a flotation in Hong Kong would give the luggage maker a firm footing in Asia, chairman and chief executive Tim Parker said yesterday.

Speaking from Singapore in a video conference, Parker, who is known by labour unions as the 'Prince of Darkness' because of his track record of laying off workers, said multiple listings wouldn't work for Samsonite.

'It's not easy [making a decision about where to list] but you have to go somewhere,' Parker said. 'We did consider multiple listings but it didn't make a lot of sense for us.'

Asia was the most profitable region for Samsonite last year but a large chunk of earnings came from North Asia rather than South Asia, Parker said.

Samsonite's net sales in Asia rose 45.1 per cent last year from 2009, constituting a third of its total sales.

China, India and South Korea were among the top five markets in Asia last year for the company, which started life in 1910 as a trunk manufacturer in the US state of Colorado. 'I'd like to think of the company as a mini Coca-Cola,' Parker said, 'without much of a Pepsi to compete against.'

Parker said he couldn't give details on the reception from institutional investors on the initial public offering but said he was 'encouraged' during the share sale process.

A source familiar with the Samsonite transaction said the international tranche was already three times oversubscribed and the public portion would be available for subscription today.

London-based private equity firm CVC Capital Partners bought the company for US$1.7 billion in 2007 at the height of easy credit financed by a loan from the Royal Bank of Scotland.

But sales of Samsonite products plummeted when the financial crisis hit the retail market. According to the listing prospectus, net sales plunged by 25 per cent from the eight months ended August 2008 to the eight months ended August 2009.

The loan had to be restructured and Samsonite did a debt-for-equity swap with RBS, which turned the British bank into a shareholder of the company. Both CVC and RBS will be selling part of their stakes in the initial public offering.

CVC's holdings in Samsonite will be slashed to 30 per cent from 54.3 per cent and RBS' will be cut to 15.8 per cent from 30 per cent following the listing.

The company's two biggest shareholders will collect a combined HK$962.73 million from selling 550.14 million shares in the IPO, if shares are priced at the top of the HK$13.50 to HK$17.50 range.

The IPO stands to raise up to HK$11.75 billion to pay debt owed to RBS and other lenders. The company said Samsonite would be debt-free following the Hong Kong flotation scheduled for June 16.

'I can't speak for them [CVC Partners and RBS on selling their stakes],' Parker said. 'But I can't believe why they wouldn't want to be shareholders ... as long as the company is generating good profits.'