Steeper climb for Kathmandu

THE timing was impeccable for a woman with a reputation as a recluse who shuns the media. Kathmandu's founder, Jan Cameron, gave two interviews last week, just days after the trans-Tasman outdoor clothing chain she co-founded in 1987 revealed details of a $440 million float.

By InvestSMART · 27 Oct 2009

By InvestSMART ·
27 Oct 2009

For the private equity owners of Kathmandu, which are now trying to float the company on the sharemarket, her words were a bombshell. Ms Cameron built the chain from a sleeping bag factory in Melbourne, with initial funds of $3000, into a multimillion-dollar venture that she sold for $280 million in 2006.

Now she has revealed she is well advanced in plans to set up an outdoor clothing business of 60 stores 30 in New Zealand and 30 in Australia to compete with Kathmandu next year. She said she was earmarking $27 million for the venture.

She was even dismissive of the Kathmandu model of regular 50 per cent off sales.

I imagine that if we are offering a similar product at competitive prices, at everyday low prices, around 50 to 60 per cent lower than Kathmandu, I imagine that might be quite attractive, she said. I really love the product and the industry and I see an opportunity with a different model."

She said it would be up to the consumer to decide if there was room for another chain.

Her plans were news to Kathmandu chief executive Peter Halkett, whose public relations people said he was in "back-to-back meetings" and on a roadshow around Australia and New Zealand before the November 11 initial public offering.

Mr Halkett has been telling institutional and retail investors about the rewards to be had from investing in the Kathmandu model, with its 85 stores on both sides of the Tasman and plans for a further 18 in New Zealand and 52 in Australia.

If all were to go to schedule, the sellers a consortium managed by Goldman Sachs JBWere and Quadrant Private Equity stand to make a profit of at least $165 million on what they paid Ms Cameron. Her bombshell has thrown a spanner in the works.

Mr Halkett had his mobile phone switched off yesterday but he told Fairfax Media at the weekend that Ms Cameron had signed a restraint of trade agreement with Kathmandu until May 2011. He said this prevented her from even mentioning plans if they involved starting a competing brand.

Ms Cameron was unperturbed. She said restraint of trade was a grey area of law that would be tested at some point. She did not believe it prevented her talking about her intentions.

KEY POINTS

Plans for $440m float.

IPO bombshell as founder announces plans for new chain.