NEW YORK — Donna Karan Corp. has apparently abandoned plans for a public offering and instead will refinance the company through a private placement.
The company has retained the investment banking firm of Benedetto, Gartland & Greene, a firm that specializes in private placements, a form of fund-raising that involves selling equity or borrowing.
An investment banker at Benedetto confirmed Friday that the firm has been retained. He said that the Donna Karan Corp. would be refinanced this year and that, rather than a public offering, it would probably be in the form of a private placement.
In another development, 37 Donna Karan employees were laid off Friday. The company said the layoffs were unrelated to any plans for refinancing.
Steve Ruzow, president and chief operating officer, said Friday the layoffs were part of a “streamlining” in order to prepare the company for “a phase of expansion.” He said that all areas of the company were affected.
The move, he said was “related to what every prudent company is doing in the Nineties.”
Patti Cohen, vice president of public relations and marketing, pointed out that Friday’s layoffs represented less than 3 percent of the company’s worldwide staff of 1,300.
In another personnel move, David Golden, who was chief financial and administrative officer, left the company last week. He had joined Karan only a little over a month ago.
Ruzow said a successor has not yet been named, and that Golden’s departure was not involved with Friday’s layoffs. He declined to elaborate.
Golden could not be reached for comment.
Meanwhile, executives at Karan could not be reached late Friday or on Sunday for comment about the private placement.
Private placements tap a pool of insurance company funds and are used for medium-sized deals, generally between $40 million and $200 million. They can be in the form of equity or debt or a combination of both. One advantage of a private placement is that it is private. There are no Securities and Exchange Commission filings that disclose the intimate details of a business. The disclosures are made privately only to potential lenders and equity buyers.
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Last November, Donna Karan postponed a much anticipated $150 million public offering because, the company said, the timing wasn’t right. Karan principals explained at the time that earnings for the third quarter of last year came in below plan and that if the company went public at that time it would not realize its full value. They indicated, however, that the company would reconsider going public at a later date.
Stephan Weiss, Donna Karan’s husband and the company’s vice chairman and co-chief executive officer, called the results for the first nine months of 1993 “very solid,” with sales of $265 million and operating profits of more than $28 million. But because of the soft retail environment, the results did not come up to expectations.
Under the planned public issue, $82.6 million would have been divided among Donna Karan, her husband, and two financial backers, Frank Mori and Tomio Taki. Another $44.3 million would go to Mori and Taki and $32 million would be used to pay down debt.
The registration statement for the public offering was filed with the SEC in August of 1993 and an amendment was filed in October.