Where to for Seardel after it sells its manufacturing wing to trade union?
The first, rather uncharitable thing I thought when I heard that Seardel was selling its clothing manufacturing business to the Southern African Clothing and Textile Workers Union (SACTWU) was "Sounds like the lunatics are taking over the asylum." After all, apparel manufacturers in South Africa simply can't compete with low wage producers like Bangladesh – SA salaries are just too high. And seeing the union – the progenitor of the industry's relatively high wages – taking over the manufacturing arm seemed like a kind of poetic justice. However, as Seardel CEO Stuart Queen points out, SACTWU is a very forward-thinking union, with an impressive history of keeping the apparel industry alive in South Africa. Perhaps the union can find a way to make South Africa's apparel industry profitable, which would be great news. Queen also discusses the future of Seardel in this interview, a future that looks likely to be focused on the chunk of eTV that it now owns. – FD
GUGULETHU MFUPHI: Clothing manufacturer Seardel has announced that it is selling its clothing business to Textile Union SACTWU. Joining us now to explain more about the deal is company chief executive, Stuart Queen. Stuart, the sale of your manufacturing plants to a Union, that's a rather unusual transaction, so why do it?
STUART QUEEN: Hi, sorry, and thanks for having me. Because I guess, just to take you back a little bit, this has been a troubled spot in our business for a number of years and been quite a significant loss maker for us. The decision was made that we couldn't as commercial shareholders actually hold on to this division any longer and so we made a decision to close the facilities down and the Union being the South African Clothing and Textile Workers Union, has – in an effort to save the production capacity and the jobs, provided the funding for a transaction to take place. So it's not necessary that the Union will operate the business going forward, but they are the parties who have come forward with the rescue money to actually save it.
ALEC HOGG: That's a fabulous story, Stuart that the people are prepared to put their necks on the line?
STUART QUEEN: Yes, I think that SACTWU's a very progressive Union in that way, if one goes back through the history of Seardel right from the start, in 2008 when it was very close to liquidation as a holding company, it was the Union itself who actually put in a lot of the capital that got Seardel through that period. So they put another 200 million Rand into the business at that time as well. So they've been very progressive in the industry and I think it is a very positive step by them.
ALEC HOGG: They've also done terribly well with the management of the funds in the sector investment trusts, Johnny Copeland who's gone onto other things I guess, if you think about HCI operations, its has been quite an inspiration, quite an amazing businessman?
STUART QUEEN: Yes, absolutely, an amazing businessman as you say and an intellectual giant I think of the business world.
ALEC HOGG: So what's happened now, or what's left in Seardel, just unpack for us what Seardel and Hosken are going to be doing together?
STUART QUEEN: Well Hosken took over Seardel in 2008 on the rights issue, so it was a Union provider that supplied the funding and HCI took about a 72% stake in Seardel. Over the last five years we've been working with the Seardel business trying to turn around the businesses that we thought could be saved, and apparel is certainly one we've given a lot of time and a lot of effort into trying to save. At the same time, trying to find other avenues of revenue growth for the business. I think it's understood that most of the clothing and textile businesses were mature assets and didn't have great growth prospects. So we've been trying to do two things; one, save as much of that capacity as we could, and two; find other areas in terms of trying to find more in the branded product space. And then very recently, HCI, as part of an inter-group restructuring, has moved its Sabido asset, it's shareholding in Sabido, into the Seardel Group. The Seardel business, or listed entity Seardel now owns HCI's stake of eTV through its holding company – Sabido.
ALEC HOGG: So if you want to have a play at eTV and of course the new television channel, Open View, Seardel is the route in?
STUART QUEEN: Yes, exactly. I think one of the rationales for that, was to give shareholders a more direct access into the media. Obviously in Seardel's, the books the media asset, is probably the overwhelming asset and overwhelms the rest of them so it is a very direct route into the media. Whereas in HCI's books, it was really maybe in the shadows of some of the casino holdings.