Coats sells Batik and properties for pounds 26m

COATS Viyella, the textiles company, has sold its Batik fabric business and two Glasgow properties for pounds 26m.

Batik, which makes the wax patterned fabric predominantly for African markets, was bought as part of Tootal, of which Coats won control in a pounds 250m hostile bid in 1991.

The two properties, formerly Coats' divisional headquarter buildings, have been sold because office operations have been relocated.

The company said the disposals 'represent further progress in the implementation of the group's cash-release programme and its strategy of focusing on core businesses'.

Coats has operations involved in most parts of textile production, from spinning yarn to selling finished clothes. Its strategy, however, is to concentrate on businesses more closely connected with consumers.

It is developing its production of material and clothes making where it can earn better profit margins.

Neville Bain, chief executive, described its commodity yarn and thread businesses as 'non-core'.

However, more substantial sales of commodity businesses are not contemplated, at least in the near future.

Yesterday's disposals will help to alleviate Coats' debt position. Batik has been bought by the Cha Group, based in Hong Kong. Cha is thought to have paid a price equivalent to Batik's net assets of about pounds 11m.

As a result of the Tootal acquisition, Coats' borrowing soared to pounds 264m at 31 December compared with pounds 91m the previous year.

Debt as a proportion of shareholders' funds rose to 33 from 11 per cent. Shares closed up 1p at 173p yesterday.