follow us

Springs Global in Public Offering

Crandall Bowles to Retire

Only 21 months after Springs and Coteminas paired up to build an international textiles platform, Springs Global, the resulting global powerhouse, is raising cash by going public — on the Brazilian stock exchange only.

Under the terms of the stock offering, Springs Global will sell 30 million shares of stock: 19 million in a primary offering, and 11 million in a secondary offering. The targeted price is 21.5 Brazilian reals, or $11.48 U.S., using the rate of exchange effective July 25, 2007. At that rate, the deal could raise a total of $344.3 million U.S. before expenses and fees are deducted.

Springs Global, the No. 1 supplier in the HTT Top 15 Supplier Giants, had 2006 home textiles sales of $2.25 billion.

The deal will provide Springs' founding Close family with an exit strategy that will leave the Brazilian partner solidly in command of what's left of a century-old U.S. textiles company that has dwindled from more than 15,000 U.S. workers to fewer than 800.

Crandall Close Bowles, co-chairman and ceo of the textiles giant founded by her family more than a century ago, said she will retire from both those posts, ceding complete control to her successor, Brazilian-born and American-educated businessman Josue Christiano Gomes de Silva, and leaving Springs Global's parent, Brazilian textiles Coteminas, with virtually total control of the company. Coteminas was founded by his father, Jose Alencar da Silva, the vice president of Brazil since 2003.

Bowles said she and her family will sell a substantial portion of their holdings of Springs Global, effectively cashing out. While relinquishing her executive-level posts, Bowles said she will remain a member of the board of directors.

Springs was once a publicly held U.S. company, America's largest home fashions supplier, when the Close family and an investment firm, Heartland Partners, bought out the company and took it private in 2001.

The merger with Coteminas was completed in early 2006. But it was hardly a marriage of equals. With Springs' sales and profits in decline, Coteminas held the upper hand and was able to force a renegotiation of the original deal terms — decidedly in its favor. Wresting control of the company, the Brazilian stakeholder soon began hacking away at costs, shutting down higher-cost U.S. manufacturing plants and rapidly moving production off shore. That left Springs with only a token manufacturing presence in South Carolina, where it had once been the state's largest employer.

Acknowledging the new global sourcing strategy, Bowles noted, "We have almost completed the transfer of much of our U.S. bedding and towel manufacturing capacity to Brazil, where we will have a low-cost, globally competitive base of production. We are also well-positioned to source or produce product in China and Mexico."

Springs Global said in the prospectus that it plans to build manufacturing operations in Asia, a key part of a strategy enunciated more than a year ago by Tom O'Connor, Springs sales and marketing chief, who said it was Springs' Global's ultimate goal to build Asian manufacturing to serve a rapidly emerging consumer base in Asian nations.

Bowles acknowledged the powerful feelings that have tugged at her and other Close family members as they watched U.S. textiles jobs eliminated: "I am proud that we maintained good jobs with competitive benefits for this area for as long as possible, and I am grateful to all our current and former employees for their commitment and positive attitudes."

The last of her family to helm the Springs colossus, Bowles first joined the company as a financial analyst from 1973 to 1978, when she was named a director. She became evp of Springs in 1992, was named president and coo in 1997, and finally chairman, ceo and president in 1998.

Not all the shares being offered up for sale will ever reach the public — half the primary offering is already spoken for. In a move to consolidate control — and in a strong and costly vote of confidence in the company's future — an unnamed Springs Global insider is buying 9.5 million of the available shares, exactly half the 19 million shares coming to market, clearly putting his money where his mouth is.

The English language version of the preliminary prospectus that spells out all the details of the IPO notes that the 9.5 million shares "will be acquired by one of our controlling shareholders" in a transaction that could end up costing in the range of $110 million. That shareholder is widely believed to be the man about to become sole chairman and ceo, Josue Gomes de Silva.

Featured Video

Other Home Furnishings Sites

Casual Living
Gifts and Decorative Accessories
Home Accents Today
Kids Today
Home & Textiles Today