Dawson International has reduced the size of its business again with its third disposal in two years, raising 6 million to help plug its pension fund deficit.

The company has sold its bed linen business to Brookmann Home Ltd for 4m plus 2.5m of inventory, which after 500,000 of costs will mean a 2.5m impairment charge on the 8.5m book value of the business, a report in The Herald Scotland said today.

The deal leaves Dawson International with only its Barrie knitwear manufacturing business in the Borders, and its US arm, which sources cashmere garments from China, the reports said.

In January this year Dawson reported an overall trading performance for the year to 1 January 2011 in line with expectations. Despite widening losses in its home furnishings division following a rise in cotton prices, the company said its UK and US knitwear divisions had performed better than expected in the previous six months. However, the company said its performance in 2011 was likely to be poorer than previously expected due to rising cashmere fibre prices.

In a statement at the time, Dawson said: "The increase in cotton prices is now well communicated in the market and it is anticipated that price increases will be accepted by our customers in 2011, allowing some recovery in margins in our home furnishings business. Cashmere price increases will impact on both our UK and US Knitwear businesses."

The company was worried about the impact of the cashmere price increases on its US knitwear division where customers had hinted that they would scale back their cashmere buys, leading to a significant reduction in turnover and profitability in that business.

Source: The Herald Scotland