After close to a year of mulling strategic options, Frederick’s of Hollywood Group Inc. has closed a deal with Five Island Assets Management that will infuse significant capital into the lingerie retailer’s infrastructure.
The company sold $10 million worth of its convertible preferred stock to Five Island Assets, a subsidiary of investment firm Harbinger Group Inc. The preferred stock is convertible into 40 million shares of the company’s common stock at a conversion price of 25 cents a share. It carries a 9 percent dividend, or is payable in additional shares of Series B preferred stock at an annual rate of 12 percent.
Upon full conversion of the preferred stock, Five Island Assets will own a majority of the Frederick’s common stock and be entitled to appoint a majority of the company’s board of directors in the coming weeks. Further details were not available.
The structure of the deal means Five Island Assets can continue to boost its stake in the legendary lingerie company. Frederick’s also issued warrants to Five Island Assets to acquire up to 10,246,477 shares of common stock at prices ranging from 1 cent to $1.21 a share.
Thomas Lynch, chairman and chief executive officer of Frederick’s, said the $10 million cash infusion will “play an important role in stabilizing our business and will allow us to improve sales by maintaining appropriate inventory levels.”
“We are excited to have received this vote of confidence from Five Island Asset Management, as they share the same long-term vision of what Frederick’s of Hollywood means to the market. We are looking forward to sharing that vision with our current and future customers domestically and internationally,” said Lynch.
The deal follows a range of strategic alternatives explored by Frederick’s, including an outright sale of the company and a business combination, after it hired investment bank Allen & Co. in May 2012. Frederick’s sold $5 million of convertible preferred stock to TTG Apparel, an investment firm run by Michael Tokarz, in May 2012. At the time, Frederick’s planned to use the $5 million it raised to pay vendors a portion of their accounts payable and, in turn, receive about $4.9 million in markdown allowances.
Frederick’s has increasingly been testing new product categories to bolster its brand name. Last fall Frederick’s entered into a collaboration with model Beverly Johnson to launch a luxury line of beauty, body and hair care products under the Beverly Johnson Luxurious Lifestyle brand. The lingerie specialist, which mails out 5.5 million catalogues four times a year, also gave its catalogue a redo and launched its first luxury label, called Harriet. The collection of upscale silk and lace lingerie and sleepwear was named after the wife of the late founder of Frederick’s, Frederick Mellinger, whose risqué black lingerie and luxe looks from the silver screen in the Forties were designed for his longtime muse, Harriet.
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye