NEW YORK — Samuels Jewelers Inc. filed for Chapter 11 bankruptcy protection last Monday in order to reorganize approximately $78 million in debt.
This story first appeared in the August 11, 2003 issue of WWD. Subscribe Today.
The Austin, Tex.-based jewelry retail chain, the nation’s eighth largest, said in a statement that it intends to conduct business as usual, and that all post-filing obligations to vendors, employees and others will be honored in the normal course of business. Samuels added that the bankruptcy filing, the chain’s third, is another step in the turnaround efforts it initiated more than two years ago.
In a voluntary petition filed with the U.S. Bankruptcy Court for the District of Delaware, Samuels said that as of July 5, the company had $78.4 million in total debts and total assets of $42.5 million.
Samuels said it will reorganize debt accumulated during the last five years by converting certain debt to equity. By cleaning up its balance sheet, the company said its new capital structure will enable it to pursue market share, expand its product line and free up operating capital to complete the remainder of its turnaround.
“The debt burden incurred in the past has seriously limited Samuels’ ability to move forward to capture increased market share in our existing stores,” said chief executive officer Randy McCullough in a statement. “We have determined that the decision to pursue restructuring of our debt through Chapter 11 is the optimum solution, given current economic conditions and the current state of the equity and debt markets.”
As of March 1, Samuels operated 124 stores in 19 states, mainly in the Southwest. The company, founded in 1891, closed 38 stores in 2002.
According to the filing, the creditors holding the largest unsecured claims include New York-based wholesale jeweler Michael Werdiger Inc., which is owed $1.2 million; M. Fabrikant & Sons Inc., a New York-based diamond wholesaler, which is owed $884,000, and diamond wholesaler Amikam & Paras, also based in New York, which has unsecured credit of $611,000. In the petition, Samuels estimated that it has more than 1,000 creditors.
For the third quarter ended March 1, Samuels recorded net income of $2.3 million, or 29 cents a diluted share, versus last year’s loss of $1.9 million, or 24 cents. Net sales fell 14.1 percent to $43.2 million from $50.2 million a year ago. For the first nine months, the firm had a net loss of $7.7 million, or 96 cents, compared with a year-ago loss of $17.2 million, or $2.16. Sales for the period fell 14.7 percent to $85.6 million.
As part of the voluntary petition, Samuels has entered into a debtor-in-possession financing agreement with DDJ Capital Management LLC, which owns a controlling interest in Samuels and is also its biggest creditor. In June, DDJ extended the termination date of two of Samuels loan facilities. Also, the company has retained Klee, Tuchin, Bogdanoff & Stern LLP as attorneys for the bankruptcy proceeding.