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Brimstone Investment had acquired an effective 34.6 percent stake in Rex Trueform (Rex-True), the owner of the up-market Queenspark clothing chain, for about R50 million, Fred Robertson, Brimstone’s deputy executive chairman, said on Friday

September 17, 2007

By Ronnie Morris

Cape Town – Brimstone Investment had acquired an effective 34.6 percent stake in Rex Trueform (Rex-True), the owner of the up-market Queenspark clothing chain, for about R50 million, Fred Robertson, Brimstone’s deputy executive chairman, said on Friday.

The investment consists of a 34.6 percent stake in Rex-True’s holding company, African & Overseas Enterprises, and 14 percent in Rex-True.

Robertson said it was a portfolio investment and was a mixture of ordinary and N shares in both the holding company and Rex-True, which owned and operated 42 Queenspark stores in South Africa and a 20 percent share in Queenspark Australia.

“We believe the company has a strong brand, a loyal client base, potential for growth, and obviously can deliver strong cash flows and dividends to Brimstone. We also believe us being in the business of the clothing trade, we understand brands, and if need be, we can assist Rex Trueform and have strategic discussions around brands.”

Robertson declined to say exactly how much Brimstone would pay or how the investment would be financed.

Queenspark would continue to be run by existing management and staff, he said. Brimstone had no operational interest and might not even be on the board.

Asked how the scaled-down Rex-True factory in Salt River, Cape Town, would be affected, Robertson said it did not fit into the picture because Brimstone subsidiary House of Monatic had an existing relationship where it operated in the Rex-True factory. This arrangement would remain in place. “We bought this … because of the Queenspark retail arm.”

Asked if House of Monatic brands such as Carducci would now be sold in Queenspark branches, Robertson said the companies’ relationship did not mean Queenspark would buy from House of Monatic. “Hopefully, we might be able to, but that is not part of the deal,” he said. “It’s a share transaction that went through the market.”

Rex-True rose 18.75 percent to R9.50 on the JSE on Friday, while the general retailers sector fell 1.17 percent. Brimstone was unchanged at R8.50, in line with the equity investment instruments sector.