DICKSON MAY UP BID FOR BARNEYS
Byline: Vicki M. Young
NEW YORK — Bidding for Barneys is about to begin in earnest.
Dickson Concepts of Hong Kong is prepared to make a substantially higher bid than the $240 million offer now on the table if the court approves a significant breakup fee, according to Ken Klee, a Barneys lawyer.
Saks Holdings, which offered $290 million earlier this week in conjunction with Isetan Co. Ltd., had gone as high as $330 million in February all by itself, according to John Brincko, Barneys’ president and chief operating officer.
This information came out at a hearing Thursday before Bankruptcy Judge James L. Garrity, who raised the possibility of appointing a mediator to oversee the bidding process.
Although there are just two bids on the table, there are three other potential bidders that have signed confidentiality agreements, according to testimony. The names were not mentioned, but the Neiman Marcus Group and Federated Department Stores have reportedly signed such agreements. It was also noted that one foreign company has signed a confidentiality agreement.
Foreign firms previously speculated on as possible bidders include LVMH, the Paris-based luxury goods giant, and Holt Renfrew, a Canadian retailer.
Brincko, who cited Saks’ prior bid during his testimony, said the offer was turned down because there was no provision for equity holders.
All the equity is controlled by Bob and Gene Pressman, co-chief executives of Barneys. Isetan had sought testimony from Bob Pressman, but he failed to show up for the hearing.
Martin Lewis, managing director of the Blackstone Group, Barneys’ financial adviser, testified that Barneys cannot be evaluated merely by balance sheet figures, which show a large deficit. He said that cash flow going forward, as well as the value of the Barneys name must be considered in determining the enterprise value. He did not give a specific figure on the value of the company.
Lewis said that the firm is for sale at the right price if an investor puts the right value on the company. Klee, however, said the company is not for sale and that this is not an auction. If they can’t get an investor at the right price, Barneys will consider a “stand-alone plan.”
Under questioning by Isetan’s attorney, Brincko conceded that the Pressmans don’t always listen to his advice. Brincko, a turnaround specialist, was brought in in March 1996, about two months after Barneys filed its Chapter 11 petition. He was appointed at the suggestion of Chase Manhattan Bank, the lead bank for the $100 million debtor-in-possession facility.
The hearing was scheduled to determine the question of a breakup fee for any accepted bid that is subsequently overbid by another buyer. The court was also supposed to rule on an application by Barneys to extend its exclusive right to file a plan until Sept. 2. The current exclusivity period expires on May 5.
Isetan has filed objections to both the exclusivity extension and the breakup fee. After a day-long hearing, Judge Garrity adjourned the case until Wednesday at 2 p.m., at which time, he said, he would resolve both issues.