Laura Ashley sells Revman stake to fund facelift

LAURA Ashley has unlocked pounds 18m of capital to boost its store-opening programme in Europe and to rejuvenate stores in the US that have suffered from under-investment since the late 1980s.

The clothing retailer is raising the money by selling a 44.4 per cent stake in Revman Industries of the US to Aeon Group, the Japanese company that has a passive 15 per cent stake in Laura Ashley.

Aeon, which is paying dollars 19m for the stake, already holds 44 per cent of Revman, a designer of bed linen and associated products for stores and mail-order houses in the US, Canada and Mexico. Revman's management owns the remaining 12 per cent.

The other dollars 8.05m is being raised from the full redemption at par of Ashley's holding of preference stock in Revman.

Ashley denied any link between the sale and the recent departure of Jim Maxmin, who resigned because of a disagreement over investment.

Ashley will still benefit from a royalty agreement with Revman that netted dollars 2.4m in the financial year to 29 January. The agreement has been renegotiated at the same percentage as the old licence, and will run for five years.

Andrew Higginson, finance director of Ashley, said the group aimed to open eight more stores in Europe. It wants to have 120 stores on the Continent by 1998, almost double the existing number.

Operations in North America, where the company has 193 stores, have suffered from under-investment. 'Some stores need refurbishing,' he said.

The funds from the Revman sale will eliminate Ashley's borrowings, last stated at pounds 16.5m - equal to 19 per cent of shareholders' funds. This year's results will include a dollars 9m-dollars 10m exceptional credit from the sale.

Mr Higginson said, however, that the deal would slightly dilute earnings after taking account of the dollars 3.2m of Revman's profits in the 1993/4 figures. But, he added, it was 'incumbent on us to get a better rate of return on the money' than available from deposit rates.