Dorel announces agreement for sale of its remaining China manufacturing facility
Dorel Industries Inc. has entered into a definitive agreement to sell its remaining juvenile products manufacturing facility in Huangshi, China to Ningbo Xihe Children Products Co, Ltd. for gross proceeds of approximately US$4 million.
“To re-iterate what we stated earlier this year, our strategic direction for Juvenile is to bring a broader product line to market with greater speed and to decrease complexity and improve cash flow. Our strategic direction is also expected to reduce volatility in the direct costs of manufacturing due to variations in the Chinese currency and commodity prices. Now that we will no longer own facilities in China, we can better focus on co-development opportunities while simplifying the organization and freeing-up resources to concentrate on product innovation and branding across our various markets,” said Martin Schwartz, President and CEO, Dorel.
The sale, which is subject to approval by regulatory authorities in the People’s Republic of China, is expected to close within the next two months. As a result of the sale, Dorel expects to incur a non-cash loss of approximately US$13.5 million in the current fiscal year.