Wednesday, 27th February 2013, Velenje, Slovenia

Gorenje divests its furniture manufacturing operations to CoBe Capital investment firm

Kitchens remain in Gorenje's offer of home products

Gorenje signed today an agreement with CoBe Capital, a global private investment firm focused on operation of non-core and underperforming business units, on the sale of Gorenje Kuhinje and Gorenje Notranja oprema, thus withdrawing from the furniture manufacturing segment. Manufacturing operations in Maribor, Velenje, and Nazarje will be carried on under the new owner, which means that jobs will continue to be provided in the future. In addition, kitchen furniture produced at the companies under the new owner will remain a part of Gorenje's offer of home products. Disposal of both companies in the furniture segment will improve Gorenje Group's profitability and free cash flow.
Gorenje's furniture segment, having run a loss for the fourth consecutive year, was severely hit by the economic and financial crisis. Negative results burden the performance of the entire Gorenje Group. Several measures had been implemented in recent years to improve the performance (optimization of production processes and all types of costs, comprehensive overhaul of sales assortment etc.); however, desired results remained elusive, especially due to low sales and production volume, and Gorenje decided to look for a strategic partner.
Gorenje President and CEO Mr. Franjo Bobinac: “Considering the circumstances, sale of both furniture manufacturing companies to CoBe Capital is the optimum solution for the Gorenje Group and all of its stakeholders. In CoBe Capital, we found a partner that will provide further development of furniture manufacturing in Slovenia and maintain the jobs. Gorenje will contribute in this respect as we will keep kitchen furniture in our offer of home products in the region, especially since there are synergy effects to be reaped from combining them with home appliance sales.”
Mr. Peter Groznik, Gorenje CFO, commented upon today's signing of the agreement: “Divestment of both companies will improve Gorenje Group's cash flows and profitability. We are also pleased to have found a partner who will carry on with operations at both companies, who sees the opportunities for their growth and development, and who will become an important supplier for Gorenje. Disposal of the two companies, as well as divestment of non-core assets, will notably improve the financial stability of Gorenje Group, which will positively affect Gorenje's relationship with business partners, banks, investors, and other stakeholders.
CoBe Capital, a global private investment firm with a permanent capital base, specializes in the acquisition and operation of non-core and underperforming business units in the Americas and Europe from leading global corporations. Last year, CoBe Capital acquired a German premium kitchen furniture producer Warendorf; this year, they added the Austrian hardwood kitchen manufacturer Kornmüller to the roster.  The acquisition of 100-percent ownership share in the companies Gorenje Kuhinje and Gorenje Notranja oprema represent CoBe Capital's first investment in Slovenia
Mr. Neal Cohen, CoBe Capital’s founder and Managing Director, stated, “We are extremely honored to have the trust and faith of Gorenje to be a brand partner going forward.  We see tremendous opportunity to grow the furniture division of Gorenje through its quality craftsmanship, design and efficient production facilities offering quite competitive cost structures. We couldn't be more pleased with our first acquisition in Slovenia.”
Dr. Henning Walf, CoBe Capital’s Managing Director for Northern Europe, stated, “Gorenje needed a strategic partner who was committed maintaining the high standard of quality that the Gorenje brand represents.  We view the Gorenje furniture division as a highly complementary operation to Warendorf in terms of process capabilities, market presence and breadth of product range.”
Dr. Walf will work closely with the existing management teams at Gorenje Kuhinje and Gorenje Notranja oprema to strengthen the companies’ operational and financial fundamentals, as well as drive expansion across Europe and into other markets around the world.
Gorenje Kuhinje and Gorenje Notranja oprema manufacture kitchens and other furniture at the plants in Maribor, Velenje, and Nazarje. There are nearly 400 employees in both companies combined.
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