Byline: Sidney Rutberg

NEW YORK--After 14 years in private hands, Loehmann's Inc. plans to go public again and filed with the Securities and Exchange Commission for the sale of 3.85 million common shares at a maximum of $14 a share. The public stock offering is part of a refinancing package that includes the sale of $100 million in senior notes maturing in 2002, according to the SEC filing. The offering is conditional upon the successful sale of the notes. The proceeds of the offering will be used to refinance existing debt and redeem all outstanding preferred shares. According to Loehmann's most recent 10-Q filing for the six months ended July 29, 33.9 million preferred shares were outstanding and valued on the books at $14.1 million. On the debt side, Loehmann's has outstanding $50.8 million in 10 1/2 percent notes and $77.6 million in 13 3/4 percent subordinated notes.
Loehmann's 10-Q listed 21.1 million common shares and 2.1 million class B shares. Common stock equity is listed as a $28.3 million deficit. The new shares to be sold would represent about 17 percent of the equity.
Underwriters for the new issue are Montgomery Securities, Robertson, Stephens & Co. and Salomon Bros. The underwriters will have an overallotment of 577,500 shares to be offered by insiders.
Coming just a day after Caldor filed for bankruptcy and in a period of depressed apparel sales, some analysts questioned Loehmann's timing.
However, Marc Kutik of Nomura Securities, said the $14 price, which is about 5.4 times cash flow of the past 12 months, "is not outlandish when compared to the multiple of other retailers." He noted that Federated Department Stores stock is selling at 5.9 times cash flow.
If there is a problem selling the shares at 14, Kutik said, Loehmann's could back off a little on price. Kutik also said, "There's no great pressure for Loehmann's to refinance right now since the senior notes are not due until 1997. The company could just wait with the offering until the retail environment improves."
Loehmann's was started in 1921 by Frieda Loehmann, who bought samples and overruns from department store suppliers and sold them at cut prices in a little store in Brooklyn. The off-price company prospered and her son Charles began an expansion program, adding branches mainly in the Northeast. It went public in 1964 and 17 years later was taken private by AEA Investors, a leveraged buyout firm. AEA sold Loehmann's to Associated Dry Goods Corp. in 1983. Three years later ADG was taken over by May Department Stores, which sold it to a leveraged buyout group in 1988. The current owners include Sefinco Ltd., an affiliate of Entrecanales yu Tavora, SA, and the Sprout Group, a venture capital arm of Donaldson, Lufkin & Jenrette.
In the year ended Jan. 29, earnings before interest and taxes were $16.6 million on sales of $392.6 million. After interest and special items there was a net loss before dividends on preferred stock of $1.5 million. In the first half of this year, Loehmann's lost $16.2 million after a special charge of $15.3 million for closing 11 stores and write-down of assets. Sales in the half were flat at $187 million.

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