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BERLIN — Escada has a new chief executive, Bruno Sälzer, and an influential new minority shareholder, the Herz business family.
This story first appeared in the June 25, 2008 issue of WWD. Subscribe Today.
After weeks of speculation accompanied by a tumultuous stock performance and the company’s second profit warning this year, Escada said late Tuesday that ex-Hugo Boss ceo Sälzer will replace Jean-Marc Loubier, effective July 1. Sälzer has also been named a member of the board of management.
Sälzer said, “Managing Escada is an exciting challenge, and I am very much looking forward to it. Few brands in the luxury fashion industry combine such worldwide renown with such great untapped potential. Escada has everything it needs to grow profitable in the luxury goods market. Escada must definitely act promptly to catch back up with its competitors, but we will make it.”
Loubier told WWD “It’s the law of capital. I’m not bitter, but I do have regrets. I knew [Escada] was a mess when I came [June 1, 2007], but I came to fix it. And I did the job I had to do. I implemented strategy, brought people together and the image of the brand is moving up.
“We were making improvements. I won’t benefit,” he said, “but the company will.”
Another Boss veteran, Werner Lackas, will also join the management board July 1, replacing Beate Rapp, who was in charge of production and logistics.
Brothers Wolfgang and Michael Herz, owners of Maxinvest, which, in turn, owns the German coffee company Tchibo and about 50.5 percent of Beiersdorf, have agreed to fully subscribe to a 10 percent capital increase in Escada at an issue price of 14 euros, or $21.73 at current exchange, a share. Escada’s stock closed at 15.53 euros, or $24.07, Tuesday, up from 14.48 euros, or $22.44. The share’s 52-week high was 37.05 euros and low 8.80 euros.
A second capital increase is to follow, and the company said the Herz brothers have also pledged to subscribe to all shares in that tranche that are not taken up by existing shareholders. The second tranche will also be issued at 14 euros a share at a subscription ratio of two for 19. That is, two new shares can be subscribed for every 19 shares of Escada stock already held by the stockholder.
The capital increase will raise the number of outstanding shares to 20.9 million from 17.9 million, generating net proceeds of about 50 million euros, or $77.5 million.
It is still not known whether companies under Herz ownership have acquired a 12 percent interest in the German fashion company as reported in the German financial press. At present, Rustam Aksenenko remains Escada’s largest shareholder, with an approximately 27 percent stake.
Escada also said Tuesday that one of the firm’s banks will replace an existing 90 million euro, or $139.5 million, credit facility set to lapse at the end of 2008 with a new 90 million euro credit with a term until Dec. 31, 2009.
Due to the planned changes in ownership, Escada said Wolfgang Herz and the Munich attorney Reinhard Pöllath will join the supervisory board. Pöllath will assume the chair from Claus Mingers, who will remain a board member.
Escada founder Wolfgang Ley, who still owns a minority stake of between 5 and 10 percent in the fashion house, told WWD, “After this terrible situation, when my company was practically ruined, I think my baby is in the best possible hands. Bruno Sälzer is one of the best European ceo’s I can think of and for me it’s an honor he’s joining the company and bringing a highly experienced chief operating officer.
“Dr. Pöllath is one of the best commercial lawyers and entrepreneurs in Germany,” he continued. “And the Herz family is fantastic. They’re incredibly solid and one of the richest families in Germany. They know branded goods management with Nivea, and I don’t think they’ll be satisfied with a minority interest,” he suggested.
As for himself, Ley said he’ll definitely subscribe to the second tranche of the capital increase.