Gerard Guez and Todd Kay, founders and executive officers of Tarrant Apparel Group, said Monday they are proposing to acquire the company’s outstanding publicly held shares.
Guez and Kay are seeking to acquire the shares for 80 cents a share in cash, which represents an 11 percent premium to the closing price on Friday.
They own about 51 percent of Tarrant’s common stock, which includes 5 million shares that may be acquired upon the exercise of stock options at a weighted average exercise price of $4.90 a share.
Guez and Kay have told the board they will not consider any other transactions involving their interest in the company. The pair said they expect the board to form a special committee to consider the proposal. The precise structure of the transaction, as well as the conditions for its consummation, will be determined through negotiations with the special committee.
Executives at the company could not be reached for comment.
Last month, Tarrant reported that fourth-quarter income plummeted 80.7 percent mainly because of lower sublicensing income, but full-year results showed a profit compared with a year-ago loss.
Income for the three months ended Dec. 31 was $325,000, or 1 cent a diluted share, versus $1.7 million, or 6 cents a diluted share, a year ago. Sales for the three months ended Dec. 31 retreated to $57.3 million from $57.4 million. The gross margin rate fell to 19.3 percent from 23.8 percent a year earlier.
Overall in 2007, Tarrant posted earnings of $1.7 million, or 6 cents, reversing losses of $22.2 million, or 73 cents, in the prior year as sales advanced 4.9 percent to $243.7 million from $232.4 million.