FIFIELD EXITS NORTH FACE, PRIVATIZATION CANCELED
Byline: Thomas Cunningham
NEW YORK — The North Face Inc.’s president and chief executive, James Fifield, resigned Wednesday and the company said a transaction agreement to possibly take the firm private has been canceled.
Los Angeles-based merchant bank Leonard Green & Partners, in conjunction with Fifield, in late February had reached an agreement to take the firm private for $17 a share. As a result of the termination of the plan, North Face will have to reimburse Green & Partners about $2.7 million of its expenses, according to a company spokeswoman.
“I was actively involved with the proposed Leonard Green transaction and I am disappointed with the termination of the agreement,” Fifield said in a statement. “I continue to believe the company enjoys an outstanding brand name and products and I look forward to remaining a member of the company’s board of directors and a major shareholder.”
A call to Fifield for further comment was not returned.
North Face, based in Carbondale, Colo., appointed its vice chairman, William Simon, as interim chief executive, effective immediately. Simon, who was chief executive officer of North Face from February 1997 until Fifield’s appointment last year, will serve until a permanent ceo is appointed, North Face said. Simon was also chairman of North Face’s predecessor company from 1988 to 1994.
“As interim ceo, I will focus my attention on improving the operating and financial results of the company while preserving the strength of the brand,” said Simon.
Deutsche Bank Alex.Brown continues to advise North Face, the company said.
North Face’s shares closed at 7 7/8, off 7/8, in over-the-counter trading Wednesday.
Fifield, formerly president and chief executive of EMI Music, became a director of the company in 1996 and was appointed to North Face’s top post in May 1998. One of his first moves as chief executive was to move the company’s corporate offices headquarters from San Leandro, Calif., to Carbondale, Colo.
In March, Fifield and Green & Partner’s plan to take North Face private was put on hold after the company discovered accounting errors that eventually led to North Face restating its 1997 and 1998 earnings downward by $3.1 million and $5.9 million, respectively.
Costs for the corporate relocation, professional fees related to the restatement and other reorganization charges dragged down North Face’s second-quarter results. For its second quarter ended June 30, the charges totaled $2.8 million pretax, helping to widen North Face’s loss to $7.6 million from a $2.6 million loss a year earlier.
In July, Chris Crawford, North Face’s chief financial officer, resigned. Then, in August, North Face and Green & Partners announced the transaction agreement, originally set to expire at the end of July, had been extended until Aug. 31. A call to Green & Partners was not returned Wednesday.
Green & Partner’s withdrawal may open the door for another investment group to make an offer for North Face, this one affiliated with Dallas-based investor Edward Rose 3rd. In a July Securities and Exchange Commission filing, the group said it held a 9.4 percent stake in North Face and might try to acquire the company. Calls to Rose’s office were not returned Wednesday.