MONDI SEEKS BACKER, FILES FOR INSOLVENCY

Byline: Melissa Drier / with contributions from Miles Socha, New York

MUNICH — Mondi, the German sportswear company, has filed for insolvency with the aim of finding new financing.
Investcorp, the London-New York-Bahrain-based investment group that bought Mondi in 1993, has apparently pulled the plug after financing losses at the company, based here, for the last five years. Executives at Investcorp in London were unavailable for comment.
In the fiscal year ended April 30, Mondi’s consolidated sales reached $92.1 million, and the company, which has been attempting to achieve a turnaround, had projected that it would see no sales growth this year.
Alexander Keller, Mondi’s chief operating officer for sales and marketing, would not disclose the extent of Mondi’s losses. However, a press report said that Investcorp had invested about $108 million since buying the firm and noted that in 1996, Mondi’s house banks had approved a loan of $54 million. Dollar figures are translated from the German mark at current exchange.
According to Keller, Mondi’s turnaround had been progressing, “but it was clear it would take another two years.”
“Investcorp wasn’t willing to finance us for that period. They didn’t see us developing fast enough to be profitable in the short term,” he said.
At present, the filing only involves the Munich-based parent company. Mondi’s subsidiaries, including Mondi of America, are not affected, Keller said.
“We are not bankrupt or insolvent, but there was the danger it could happen in a couple of months, which is why we had to apply for insolvency now,” Keller said. The banks have not canceled the company’s credit lines, and Mondi is continuing to meet with potential investors and the banks.
Keller would not confirm industry reports that talks fell through with an Italian group and that a management buyout had been considered. He did, however, note that there were several parties interested in Mondi. A company statement said “further information concerning the results of these talks would probably be made known by the end of September.”
Deliveries for fall-winter will be completed, and while the first spring-summer deliveries are in production, and orders have been developing positively, the season is somewhat on hold. “We are in a time where the receiver needs to get a clear view,” Keller remarked.
“But we’re still alive and kicking,” he added, “and working on the future. The brand is strong, international distribution is interesting and the collection has improved a great deal. We’re very optimistic.”
Similar comments were sounded by Peter Littmann, Mondi’s executive chairman, who is chief executive officer of the Wunsche Group, Hamburg, another apparel firm that has no affiliation with Mondi.
“It’s a pity it happened. We all know how difficult the bridge market became,” he said. “No one’s happy being in the bridge market.
“[Investcorp was] supportive and patient for a long time. But finally they said look, there’s a limit. But Mondi is a good company,” Littmann said.
“Mondi’s changed a lot. Maggie Norris [head of design] has done a great job. What’s needed is fresh money for marketing. The collection is good, we have excellent people, strong stores. It just needs some money, and then it will fly,” he declared.
In New York, Salvina Sultana, president of Mondi of America, stressed that she plans to continue developing the business here without interruption. In fact, Mondi is slated to open a larger location in Seattle in the Pacific Place mall on Oct. 1.
“Our business in the United States is strong and financial results continue to improve,” Sultana said. “I believe very strongly that we are heading in the right direction.”
Sultana noted she is selling the spring 2000 collection and “we’re running way ahead of projections.”
Mondi of America, which has about 250 employees, operates 44 full-price stores and four outlets. Wholesale accounts account for about 30 percent of revenues. Key accounts include Saks Fifth Avenue, Nordstrom and Jacobson’s.
Worldwide, Mondi employs 750, 320 of whom are in Germany. It operates 70 company-owned shops globally, and there are 65 franchisees, shops, corners and concessions worldwide. The U.S. and Canada contribute 50 percent of turnover, with Europe generating 35 percent and Asia 15 percent.
The company, founded in 1967, was particularly successful in the Eighties, and in 1992 volume was reported at about $244 million. However, after being sold, management changes, design fluctuations and overdistribution took their toll.
Most recently, the firm was working for a revival with new design leadership under Norris, an American designer and Ralph Lauren veteran, who came on board early last year.

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