Byline: Jeff Siegel
NEW YORK — The Leslie Fay Cos. said 1994 operating profits will be closer to $6 million than the $16 million originally predicted in its three-year business plan.
The expected shortfall reflects operating results in the first seven months and the damaging effects of the 44-day strike by the ILGWU, the company said.
The lowered projection was disclosed in papers the company filed in bankruptcy court here in a motion seeking an extension of Leslie Fay’s exclusivity period.
Last year, Leslie Fay posted a $32.5 million operating loss.
In addition to the modifications to its 1994 business plan, Leslie Fay said it has made “corresponding adjustments” to the plan for fiscal years 1995 and 1996 and extended its outlook through 1998, giving it a five-year plan.
A company spokesman declined to disclose the extent of the adjustments.
Leslie Fay, which has been in Chapter 11 since April 1993, is seeking to extend by about 100 days to Jan. 12, 1995, the time it has the exclusive right to file a plan of reorganization. Leslie Fay’s exclusive period is set to expire Oct. 3.
In the motion for the extension, Leslie Fay said its management spent the past two months focusing on revamping earlier projections, and its financial adviser, The Blackstone Group L.P., has just completed a preliminary valuation of the firm’s businesses.
With those tasks out of the way, Leslie Fay said it is now prepared to engage in “meaningful negotiations” to formulate a consensual plan of reorganization.
Creditors, however, are still busy gathering information in order to make a determination regarding Leslie Fay’s value. This is one reason negotiations have not yet taken place, Leslie Fay said.
Leslie Fay noted that negotiations with creditors will probably include “several reorganization alternatives” that will require additional time to consider.
The additional time, Leslie Fay said, will also give all parties an opportunity to evaluate its performance under the revised business plan, while allowing the company to operate under the business plan “for essentially a complete year, covering all of its selling seasons.”
A hearing on the motion to extend exclusivity is scheduled for Sept. 28.
— Fairchild News Service