CIRO GETS 2 MORE SUITORS

Byline: Jeff Siegel

NEW YORK--Ciro Inc., the jewelry chain that early last week seemed ready to accept a $6.5 million purchase offer from representatives of Goldman, Sachs & Co., is now engaged in acquisition talks with two additional companies, a source close to the company said Friday.
One of the new bidders, Heller Financial Inc., has put in a bid for Ciro that equals Goldman, Sachs $6.5 million offer, but would grant unsecured creditors a $750,000 payout - $500,000 more than the Goldman, Sachs proposal, the source said.
In addition, Heller has proposed a $5 million debtor-in-possession loan that would easily beat Goldman, Sachs' $2 million DIP, according to the source.
Goldman, Sachs, which was all set to buy the troubled jewelry retailer through its Cerberus Partners L.P. and Pearl Street L.P. units, is said to be ready to walk away today if it can't cement a deal during Ciro's disclosure statement in the morning.
"Goldman, Sachs is gone if [Ciro] doesn't do it Monday," the source predicted.
Debra McCullough, of Sherman & Sterling, counsel to Ciro, said, however, the Goldman, Sachs offer was the only true offer at this time and it expects to get the deal approved today.
Joyce C. Johnson, senior vice president at Cerberus, did not return calls. Heller officials could not be reached for comment.
Ciro has apparently favored the Goldman, Sachs deal all along, the source noted, because of the investment firm's promise to keep Ciro's current management in place.
Ciro's creditors are also impressed with Goldman, Sachs' deal, mostly because of the investment group's track record, but the source said creditors would probably be willing to hear other offers.
"The issue for creditors is not really the size of the payout, but rather the survival of the company," said the source, who noted that the majority of unsecured creditors are Ciro's suppliers.
Another late entry into the Ciro sweepstakes reportedly is Impostors Copy Jewels Inc., a jewelry chain based in San Mateo, Calif. Impostors has apparently not made a concrete offer yet, but talks between it and Ciro are heating up, according to the source, who said Impostors could make a serious play for Ciro's at today's hearing.
Officials at Impostors could not be reached for comment.
McCullough disputed the notion that Ciro was seriously considering any proposal other than Goldman, Sachs' offer. She said Ciro filed a revised disclosure statement Friday--which includes the Goldman, Sachs offer--and she expects it to be approved in court today.
Michael Deutsch, counsel to Ciro's unsecured creditors, said he did not want to comment on the various proposals.
However, asked why so many companies would be interested in Ciro's, which has only $42 million in annual sales, Deutsch said that Ciro's leases, especially those in Europe, have not been valued and could make Ciro much more valuable than it currently appears.
--Fairchild News Service

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