OLEG CASSINI PAYING $3 MILLION TO BUY CONTROL OF HE-RO GROUP
NEW YORK — Oleg Cassini will pay $3 million for 20 million newly issued shares — or a 60 percent stake — of He-Ro Group Ltd., under the previously announced proposal to take over control of the eveningwear maker.
Stonehill Investment Corp., an investment firm, will pay $4 million in cash for 6.9 million newly issued shares, or a 20 percent stake.
These additional details of the proposed deal are included in a filing with the Securities & Exchange Commission.
It was first announced on March 12 that Cassini and Stonehill had agreed to buy an 80 percent stake in He-Ro Group for $7 million and some licensing income. He-Ro manufactures eveningwear and special occasion wear under the labels Black Tie by Oleg Cassini and Niteline by Della Roufogali.
Under the agreement, Cassini will pay $1 million in cash to He-Ro upon closing of the sale. The veteran designer, who turns 84 this month, will also deliver two noninterest-bearing notes with a principal of $1 million to He-Ro, with one note due on the one-year anniversary of the closing of the sale, and the other due the following year.
The agreement also provides that He-Ro will manage the day-to-day operations and supervise five of Cassini’s existing license agreements and any future license agreements relating to women’s apparel in exchange for half of the royalties collected under such license agreements.
In addition, the estate of the late Herbert Rounick, who founded the company and headed it until his death in 1993, has agreed to sell to Stonehill all but $1 million of the approximately $6 million of subordinated debt owed by He-Ro to the estate.
Della Rounick, currently chief executive officer and the widow of He-Ro’s founder, will continue to hold 4.4 million shares in the company. With the issuance of the new shares, Rounick’s stake will drop to 13 percent from 66 percent.
Upon closing, He-Ro’s current board will resign, and the size will increase to seven members from three. The new board members will include Cassini; Ronald LaBow, Stonehill’s president and principal stockholder, and three others to be picked by Cassini or LaBow. Della Rounick and another chosen by her will round out the board.
The current board consists of Della Rounick; William J. Carone, co-chairman, and Martin R. Bring, a member of the law firm of Lowenthal, Landau, Fischer & Bring.
The closing of the transaction is still subject to regulatory approval and certain other closing conditions.