Kasper Hires Peter J. Solomon To Explore Its Strategic Options

NEW YORK — It might take more than $100 million to buy the Kasper and Anne Klein family of brands.<br><br>Kasper ASL disclosed Monday that a special committee of its board of directors has hired Peter J. Solomon Co., the investment bank, to look...

NEW YORK — It might take more than $100 million to buy the Kasper and Anne Klein family of brands.

This story first appeared in the December 24, 2002 issue of WWD.  Subscribe Today.

Kasper ASL disclosed Monday that a special committee of its board of directors has hired Peter J. Solomon Co., the investment bank, to look at its strategic options that could include a sale of the company, raising the possibility that the $100 million offer made by a group of Kasper senior management this month might not be enough.

The company filed a prepackaged reorganization plan in February, expecting to emerge from bankruptcy by paying off its creditors with new stock issued as the Anne Klein Group, although a potential sale of the company could change that plan. The directors’ committee could have immediately accepted the offer made by Kasper’s management, led by John D. Idol, chief executive officer, and backed by Parthenon Capital, but instead turned to an investment bank to consider its strategic alternatives, indicating the committee felt the Kasper and Anne Klein core brands could fetch a higher price.

Idol, who along with management raised their own offer by $12 million on Dec. 10, declined to comment Monday on the potential value of the brands should a bidding war ensue, citing his role as an officer of the company.

“Generally, when an offer is made, different things can happen,” he said. “The special committee for the board of directors, as part of that process, can accept that offer or say that they want to hire an investment banker to evaluate that offer and make sure that it is fair.”

Engaging the services of Peter J. Solomon, the investment bank that recently advised Lands’ End on its sale to Sears for $1.9 billion, remains subject to bankruptcy court approval, but the move also has the support of Kasper’s creditors’ committee, working in tandem with the board to explore the company’s alternatives. Executives at Solomon declined to comment on Monday, but virtually all of the big apparel companies are expected to take a look at the suit and sportswear concern, including Liz Claiborne Inc., Jones Apparel Group, VF Corp. and Kellwood Co.

The better-price suit powerhouse, Kasper ASL was formed as a public company spun off from The Leslie Fay Co. when that company emerged from bankruptcy court protection in 1997. Kasper quickly went after acquisitions of its own, nailing the Anne Klein buy in March 1999 for around $75 million after months of negotiations. But the debt incurred by the transaction — more than $110 million, according to the company — eventually forced a management shuffle that pushed out company founder and ceo Arthur S. Levine shortly after Idol was brought in after a turnaround at Donna Karan International to examine its liquidity problems, followed by the prepackaged bankruptcy filing.

In the past year, the company has shown signs of improvement, including a repositioning of the high-profile Anne Klein brands under designer Charles Nolan, with classic sportswear elements that more closely reflect the philosophy of its namesake, who built the brand into one of America’s most prominent fashion legacies.

The company has also reported four consecutive profitable quarters — $10 million in income for the three months ended Sept. 28, versus a $25.3 million loss in the year-ago quarter. Kasper last year generated $383.9 million in sales.

In recognition of the potential power of the Kasper and Anne Klein labels, Idol and a group of Kasper management first presented an $88 million offer to purchase the firm on Dec. 4 and raised the offer to $100 million a week later. Both figures include $6 million designated to pay transaction fees and other expenses, with the remainder going to pay off its creditors.

Industry estimates put the total amount of Kasper’s outstanding claims at about $148 million.

Under the current reorganization plan, Kasper plans to change its name to Anne Klein Group, as outstanding Kasper stock would be swapped for the newly issued shares of Anne Klein, while debt would be transferred into equity in the new company. ASL refers to Levine, who has since formed a partnership with Elie Tahari to create a new suit business as a competitor, called Arthur S. Levine for Tahari.

Kasper’s largest securities holders are Whippoorwill Associates and Bay Harbour Management — the vulture funds that own Barneys New York and have a combined stake in Kasper of more than 30 percent. Other holders include ING Equity Partners and Harvard Management Co. Whippoorwill is also among the creditors holding the largest unsecured claims, according to previous filings.