LOS ANGELES — The manufacturing operations of Esprit de Corp., Esprit Group’s U.S. arm, are winding down as the San Francisco-based company prepares to sell its trademark rights here and in the Caribbean to Esprit Holdings Ltd., or EHL, a Hong Kong-based public firm.

If the $150 million transaction agreed upon last Thursday is consummated, EHL will have sole ownership of Esprit International, a California-based limited partnership, which controlled the Esprit trademarks worldwide, other than in the U.S., and apparel manufacturing in Germany. Previously, through a limited partnership, EHL owned 63 percent of Esprit International and Esprit de Corp. owned the remainder.

Michael Ying, chairman and chief executive officer of EHL, and his partner, European investor Jurgen Friedrich, who together hold about 54 percent of the company, are expected to vote in favor of the acquisition. The deal is expected to be complete by April 30. Esprit de Corp. is owned by two hedge funds, Cerberus Partners in New York and Oak Tree Capital Management in Los Angeles.

Joseph E. Heid, chairman and ceo of Esprit de Corp., was unavailable for comment. However, in a statement, he said that the manufacturing entity will continue to produce full lines for spring and summer 2002 and plans to fulfill all orders to department stores and for 20 full-line Esprit stores and 20 affiliated outlets. The company produces and distributes women’s sportswear, children’s apparel, footwear and accessories. Heid said the company is committed to satisfying financial obligations to all vendors.

By fall, Esprit de Corp. will become a nonoperating holding company for some real estate investments in the U.S., but will liquidate other assets, “as appropriate,” according to the statement. Initially, about 40 employees in the company’s headquarters and 40 employees in other parts of the U.S. will be terminated as a result of the acquisition. Esprit officials would not divulge exact details of how the U.S. business will wind down or provide any hints about the future of the remaining 950 employees here, or the plans for its domestic retail operation. About 75 percent of U.S. employees are affiliated with its retail operations.

Meanwhile, Esprit International indicated that Esprit’s presence in the U.S. will be of a licensed nature, noting it will explore “even more aggressively, additional licensing opportunities,” according to Heinz Krogner, executive director and ceo of Esprit Europe AG, based in Dusseldorf, Germany. Esprit Europe forms a part of EHL along with Esprit Asia.

“We believe that we will establish the right business mix for the U.S. quickly,” he said, in a statement.

Heid said the agreement will enable the Esprit brand to be a “global presence which will make it much stronger on an economic basis as well as further enhance brand equity.” In addition, Heid was confident that “+the financial scope of this transaction will yield a good return for our investors.”

EHL currently controls retail space upward of 3 million square feet in more than 40 countries worldwide. It operates 500 directly managed Esprit stores and 2,000 franchised shops worldwide.

Founded in 1968 by the then-married Doug Tompkins and Susie Tompkins (now Russell), Esprit U.S. wielded awesome junior brand power in the Eighties and at that time counted some $600 million in sales. With international partners, they also turned it into a global brand.

The couple eventually ran into marital problems that coincided with business troubles. After a number of turbulent years, the Tompkinses split in 1989. In 1990, Susie Tompkins and an investor group bought out her ex-husband’s stake in the U.S. business. Doug Tompkins continued to hold a stake in the worldwide business.

In 1996, the two severed their ties to Esprit altogether and sold their interests to Ying. At that time, the Esprit Group was set up as three separate entities. About 63 percent of the company was split between Esprit Europe and Esprit Asia, while Esprit de Corp. controlled 37 percent of the brand. Ying acquired the European arm, initially set up by Jurgen Friedrich and Peter Buckley in 1977, by the mid-Nineties.

Sales of the U.S. operation were $200 million last year, said the company.

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