FORSTMANN LOSS DEEPENS
Byline: Vicki M. Young
NEW YORK — Bankrupt Forstmann & Co. Inc. reported substantial losses for its latest quarter and nine-month periods, stating in a Securities and Exchange Commission filing earlier this month that certain industry factors raised doubts about the company’s ability to continue as a going concern.
However, Rod Peckham, president, said Monday that the company is making progress in finding a partner or buyer.
For the third quarter ended Aug. 1, Forstmann had a $7.2 million net loss compared to a $4.2 million net loss last year. Excluding a $1.3 million reorganization charge, the net loss would have been $5.8 million for the quarter. Sales dropped 40 percent to $23.4 million from $39 million.
The SEC filing stated that there is “no assurance” that the company will be able to achieve an adequate level of sales to meet operating needs. Forstmann said that expected cash flow from operations is influenced by market conditions which depend on the financial condition of the apparel industry. “These factors,” Forstmann said, “raise substantial doubt about the company’s ability to continue as a going concern.”
As reported, Forstmann, which filed for Chapter 11 bankruptcy court protection in July, has been looking for a merger partner or a buyer for the company.
Discussing the search for a partner, Peckham, in a telephone interview, said, “Over 150 companies were contacted and confidentiality agreements have been signed with 40.”
He added that 10 companies have received detailed financial information on Forstmann and three of the 10 have visited the plants. Peckham said he expects one of the three to make an offer shortly. All three companies are based overseas, according to Peckham.
The SEC filing also said that Forstmann Apparel Inc., a subsidiary formed with assets purchased from the Arenzano Trading Co. Inc. bankruptcy in 1998, has ceased operations.