The beleaguered Warnaco Group surprised observers recently when it said it would emerge from bankruptcy protection in early 2003 as a standalone company, with much of its stable of brands remaining.Upon exiting bankruptcy, Warnaco will hold $265 million in debt, which includes senior subordinated notes, plus its borrowings under an exit facility. At its peak, Warnaco’s capitalization in June 1998 was $2.8 billion. The company’s bread-and-butter brands include Warner’s, Olga, Bodyslimmers, Lejaby, and of course, Calvin Klein Underwear for men and women, which it owns outright, and a long-term license for CK Jeanswear.There are several big questions for 2003. Following Phillips-Van Heusen Corp.’s acquisition of Calvin Klein Inc. this month for $700 million, the relationship with Warnaco will likely be tested.PVH told WWD it had a "full plate" and was currently not looking to buy the Calvin Klein businesses at Warnaco, and a deal with VF Corp. was thwarted by Klein and the Warnaco board voting it down in December.Warnaco acquired Klein’s men’s underwear business and trademarks for men’s accessories worldwide from the designer’s company in March 1994 in a deal worth $64 million, plus ongoing fees. As part of the deal, Warnaco took over the Calvin Klein women’s underwear business in 1995.In 1997, Warnaco acquired Designer Holdings Inc., maker of Calvin Klein Jeanswear, in a deal worth about $354 million. The pact gave Warnaco one-third of the $2.5 billion Calvin Klein empire.Warnaco’s board will soon need to name a new chief executive officer. Tony Alvarez, the ceo hired in November 2001 to lead the company through its bankruptcy, is expected to return to the turnaround firm Alvarez & Marshal after a completed reorganization.Industry observers said it most likely will come down to two candidates: John Kourakos, president of the Sportswear Group, which includes the Chaps by Ralph Lauren men’s wear label and the Calvin Klein Underwear and Jeanswear businesses, and Tom Wyatt, president of the Warnaco Intimate Apparel Group.

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