By  on March 26, 2010

The Talbots Inc. bypassed a possible roadblock to its merger with BPW Acquisition Corp. Friday when a Delaware court denied a request from a group of hedge funds to halt a warrant exchange that expired Friday.

On Tuesday, Pentwater Growth Fund, Oceana Master Fund and Pentwater Equity Opportunities Master Fund, all of which own BPW warrants, asked Delaware Chancery Court for a temporary restraining order to stop the exchange.

In a statement late Friday, BPW said the court ruled that the investors had not met the requirements for a temporary restraining order.

The hedge funds charged the exchange would be a losing deal for them and that it appeared BPW tried to “coerce warrant holders to tender into the exchange offer.” They said they did not intend to tender their BPW warrants in an exchange, which was amended on March 17.

In a separate court filing, the hedge funds said they were beneficial owners of 3.3 million BPW warrants, about 9 percent of those outstanding. The deal depended on at least 90 percent of warrant holders making the exchange, analysts said.

Earlier this month, Talbots shareholder John Campbell dropped a request, also filed in Delaware Chancery Court, for a preliminary injunction to stop the merger. In exchange, the retailer agreed to, among other conditions, keep the positions of chairman and chief executive officer separate; put all directors up for election at the 2010 annual meeting; limit the number of directors to 10, with an independent majority, and require all board members to own a predetermined value of company stock.

Although Campbell agreed to drop his request for an injunction, he didn’t agree to dismiss, settle or withdraw the rest of his suit, originally filed on Jan. 12.

The Hingham, Mass.-based retailer revealed plans to merge with BPW in December. At the time, Talbots said it expected the transaction to close before the end of the first quarter in April.

The arrangement calls for Talbots to use at least $300 million of BPW’s trust and a new $200 million credit facility from GE Capital to repay its $491 million debt to Aeon Co. Ltd. and Japanese banks in cash. The specialty retailer would then retire the 29.9 million shares that make up Aeon’s 54 percent stake in the firm. BPW stockholders approved the proposed merger last month.

To access this article, click here to subscribe or to log in.

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus