[prior-sept-05/ Fashion News ASAP - Keep up to date with trendy Apparel Industry News ]

Explore Sales of Individual Fingerhut Assets

From: ASAP


Federated Department Stores, Inc. (NYSE:FD)(PCX:FD) announced today that more than a month after entering into a non-binding letter of intent with Business Development Group Acquisitions, Inc. (BDGA) for the sale of Fingerhut as a going concern, the two sides have yet to sign a definitive agreement relating to the transaction.

While progress has been made and both Federated and BDGA intend to continue discussions and negotiations, sufficient uncertainty exists as to whether a transaction will be concluded. Therefore, Federated said it will begin to explore potential transactions with third parties interested in purchasing individual Fingerhut assets - as well as catalog subsidiaries Arizona Mail Order, Figi's and Popular Club, which are expected to be sold as going concerns - and will begin terminating Fingerhut catalog employees in early April.

"We have provided BDGA five weeks to complete due diligence, secure committed financing and execute an agreement on terms acceptable to Federated, and despite good faith efforts by both sides to accomplish this, committed financing has yet to be secured and a transaction has yet to be finalized," said Ronald W. Tysoe, Federated vice chairman. "While we are still hopeful of completing a transaction with BDGA, it is now time to additionally explore negotiating the sale of individual components of Fingerhut, with an emphasis on preserving as many jobs as possible in that process."

Peter Lytle of BDGA agreed. "While we still hope to be able to conclude this transaction, we understand Federated's need to explore alternative sale scenarios for the Fingerhut assets. We also are comfortable with them initiating employee terminations since we believe we would be able to rehire many of these workers if we do successfully complete the purchase. Meanwhile, I want to emphasize that Federated has remained cooperative with us in this process. They have provided us additional time to do our due diligence and line up financing, and they continue to work with us."

Tysoe said that no other parties interested in buying Fingerhut as a going concern have emerged since January, but Federated has been contacted since then by a number of parties interested in talking to the company about purchasing various parts of the Fingerhut operation. "We have delayed doing so until it could be determined if a sale of the entire business as a going concern would be possible," Tysoe said, "but we can't keep these parties on hold indefinitely. It also is not fair to the Fingerhut organization to prolong the uncertainty with which they have been living. So we will be moving forward on these fronts quickly."

"Meanwhile," Tysoe said, "we want to ensure that all affected employees are provided severance benefits and that they are taken care of to the fullest extent possible in these very difficult circumstances. We even have told the union that we are willing to offer severance benefits for its members that are in excess of those provided for in existing union contracts. We have done so because we believe that ensuring that all employees, both union and non-union, get enhanced severance benefits - even as we explore asset sales that could lead to the rehiring of many of these employees - would be the best possible outcome for the individuals and communities affected. So this is our goal."

Federated said that about 3,300 of the approximately 3,700 Fingerhut employees who previously received WARN termination notices would be terminated by April 5, and specifics regarding severance benefits and other details of termination will be provided to affected employees in the next few days. In the event a sale is not consummated, most of the remaining employees would be retained for varying periods during the close down of Fingerhut operations.

The company reiterated its earlier expectations that the disposition and monetization of Fingerhut's assets will generate approximately $1.1 to $1.3 billion of after-tax cash proceeds (net of one-time costs) over the next four years.

Federated, with corporate offices in Cincinnati and New York, is one of the nation's leading department store retailers, with annual sales of more than $15.6 billion. Federated currently operates more than 450 stores in 34 states, Guam and Puerto Rico, under the names of Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's. The company also operates macys.com and Bloomingdale's By Mail.

ASAP Fashion News Fast - Fashion news for the apparel industry and consumers to learn more about the clothing business.

Apparel Search  ASAP News