WASHINGTON -- Sirena Apparel Group Inc. has become the second swimwear manufacturer to dive into the IPO market this month.
The South El Monte, Calif., company, whose lines include the licensed Anne Klein label and its own Sirena collection, filed a registration statement with the Securities and Exchange Commission last week for an initial public offering of 1.5 million shares.
The offering is expected to net $8.01 million.
As reported, Beach Patrol Inc., a Carson, Calif., company that makes Baja Blue, Rebel Beach and four other swimwear lines, early in June filed for an offering of 2 million shares, half of which are being sold by stockholders. Beach Patrol expects to net $9.9 million.
A stock analyst who did not want his name used said he does not expect the two offerings to detract from one another. There is room in today's market for both, he said.
Henry R. Mandell, Sirena's senior vice president, chief financial officer and secretary, said the near-simultaneous filings are coincidental, but added, "I think it's a good sign for the women's swimwear business that companies like Sirena and Beach Patrol are able to approach the market."
Sirena intends to use proceeds to reduce its factor debt, which totaled $9.7 million on May 31; to pay down advances in a revolving line of credit from Signal Capital Corp. that totaled $4.6 million at the end of May, and to repay a $207,000 term loan from Signal.
As part of its business strategy, Sirena intends to acquire additional prominent brands and to significantly broaden its private label operations, the registration statement said.
Sirena has recently become profitable after operating in the red for several years. The company posted income of $742,000 in the nine months ending March 31, 1994, against a loss of $535,000 a year earlier. Net sales rose to $23.3 million from $20 million.
Signal, which acquired Sirena in a leveraged buyout in the late Eighties, now owns all of the company's outstanding common stock, all of its series B preferred stock and 94.2 percent of the outstanding series A preferred stock. Concurrent with the offering, series A stock will be converted to common stock, while the series B and pre-offering common stock will be canceled.This will leave Signal with 52.5 percent ownership of the company and officers and directors with 13 percent.
In fiscal 1993, which ended June 30, 1993, the company was plagued by cold weather, economic weakness and substantial discounting by an unnamed rival company that was trying to ward off bankruptcy. Sirena responded by introducing its private label business for mass merchandisers and increasing its custom-designed swimwear sales to catalog merchants such as Eddie Bauer, Talbots and Victoria's Secret.
Business improved in the nine months ending March 31, 1994, as Anne Klein swimwear sales ballooned 56.5 percent, private label jumped 44 percent and Sirena division sales grew 10.7 percent, the registration statement said.
Partially offsetting those gains, Look & Sea division sales fell 17 percent, compared with the year-ago nine-month period, "due to increased competition in the embellished swimwear segment and management's emphasis on achieving higher growth in the larger Sirena and Anne Klein divisions," the filing said.
Anne Klein designer swimwear accounted for 17.2 percent of Sirena's net sales in the nine months ending March 31. Sirena, a better misses' line, made up 41.5 percent; value-priced private label swimwear and resortwear, 27 percent; WearAbouts resortwear, 11.1 percent, and Look & Sea contemporary swimwear, 3.2 percent.
Last month, Sirena paid about $1 million for the trademark, raw materials and designs of Rose Marie Reid, a moderate-price misses' swimwear line that had been a major competitor to the Sirena label.
"The Rose Marie Reid brand will provide the national chain department stores with a leading brand name to complement [Sirena's] private label swimwear," the filing said.
According to the registration statement, Sirena's president and chief executive officer, Douglas Arbetman, earned a salary of $165,157, a bonus of $50,000 and other compensation of about $13,000 in fiscal 1993. Mandell received a salary of $94,569, a $17,500 bonus and additional compensation of $6,000.
Upon completion of the offering, Arbetman is slated to receive $300,000 per year, plus a bonus as high as that amount and stock options. Mandell will receive $124,630, a bonus of up to half of his salary and stock options.
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