Thursday, May 21, 1998

Plains Cotton Cooperative completes acquisition of Mission Valley

By J.T. SMITH Farm Editor

Plains Cotton Cooperative Association (PCCA) of Lubbock said Wednesday that it had completed its acquisition of Mission Valley Textiles, Inc. (MVT).

The MVT plant is located in New Braunfels.

This acquisition is seen as a highly positive move for cotton growers.

PCCA, a farmer-owned cooperative, purchased 100 percent ownership of MVT for $25 million and financed the acquisition with working capital.

"This acquisition is just the sort of thing for which our current financial strength was built," said Van May, PCCA president and CEO, Lubbock. "It allows us the flexibility in attempting to enhance an already-excellent (PCCA) textile operation."

Patrons' equity in PCCA currently totals more than $100 million with only $12.5 million in term debt. Prior to the acquisition, PCCA's board of directors and delegate body unanimously agreed the transaction would be beneficial for cooperative members.

May cited MVT's superb reputation in the textile marketplace.

The PCCA president said the marketing, creative and sales expertise of the Mission Valley staff -- coupled with PCCA's financial strength -- should make an ideal combination, with each complementing one another's strengths.

PCCA's total employment figure stands at 1,350 following this acquisition.

*bA good mix of textile products*b

MVT is a large U.S. manufacturer of yarn-dyed woven fabrics.

Its product mix includes both apparel fabric and home furnishings such as upholstery fabrics, "top--of-the-bed" and craft trade fabrics.

May said apparel fabrics comprise about 70 percent of MVT's total volume.

Darryl Lindsey, PCCA's Textile Division chief operating officer, said MVT's competitive advantages in the U.S., market include customer service, fashion trends, cycle time, reputation, and a flexible and adaptable workforce that is skilled in fancy fabrics.

"Through global fashion market research, MVT remains on the cutting edge of apparel fabric design and is known for its response to customers' needs by re-designing styles to accommodate changing consumer preferences," Lindsey said. "This diversity enables MVT to sell to a broad range of customers -- from major designer brands and speciality stores -- to private labels and department store chains both domestically and internationally."

*bGood timing of textile acquisition*b

May also noted the timing of PCCA's expansion was another important consideration.

"The timing seems right for PCCA to move into a broader arena of fabric merchandising," May said. "But the primary focus will continue to remain on basic denim production which has been such a consistent margin provider for PCCA members for many years."

Cotton growers who provide fiber for the textile operations should see clear benefits.

"The net of it all is that we believe there is more money to be made for our membership in textiles than we are currently enjoying, and this acquisition helps move us in the direction of capturing more of those margins," May said. "It should give us opportunity to add more value to more cotton and improve our returns to PCCA's members."

The cooperative's total annual gross sales are about $1 billion.

During the past five fiscal years, PCCA has distributed $152.7 million to its members in the form of dividends, stock retirements and revolvement of per-unit capital retains.

"The acquisition of MVT should enable PCCA to increase these payments to its members, and that will have ad added economic impact on every community served by this cooperative."