HE-RO AGREES TO MERGER WITH NAH NAH
Byline: Eric Wilson
NEW YORK — The He-Ro Group has signed a stock purchase agreement with Nah Nah Collections to merge the two firms into a combined company. At the same time, Della Rounick announced her resignation as chief executive officer and chairman of He-Ro after two years in that position.
The intended merger was announced Sept. 4 as He-Ro was going through a liquidity crisis. Completion of the merger with Nah Nah would preclude a bankruptcy or liquidation of He-Ro, a spokesman said.
According to details of the deal, announced Monday, Hong J. Han, president and ceo and the sole shareholder of Nah Nah, would receive up to 44 percent of the common stock of the combined company, to be called the Nahdree Group, in return for the sale to the new company of all issued and outstanding common stock of Nah Nah. Han would become the largest shareholder of the Nahdree Group.
Following the closing of the merger, Han would become president and ceo of the combined company. Sam Kaplan, He-Ro’s chief financial officer, is acting as its ceo in Rounick’s absence.
“Combining the two companies, we’re going to become a category leader in terms of eveningwear and special occasion,” Kaplan said.
There are two million shares of He-Ro stock held publicly. Rounick, the widow of the firm’s founder, Herbert Rounick, owns 4.4 million shares of He-Ro, or about 66 percent of the stock. Her stake in the company would be diluted to a minority ownership under the proposed merger.
Rounick, who has been ceo since June 1995, remains a director of the company and will have the right to retain a seat on the board of the new company after the deal is completed.
He-Ro has been searching for a capital infusion or buyer since spring. A deal to sell the firm to Oleg Cassini, whose name He-Ro licenses for eveningwear, and investment firm Stonehill Group fell through in July when He-Ro was delisted by the New York Stock Exchange, Kaplan said.
As a condition of closing, the combined company would have to obtain an adequate bank credit line to meet each firm’s working capital needs. The merger is still subject to due diligence by both firms, execution of definitive agreements, financing and certain third-party approvals.
Nah Nah, a privately held firm, makes ready-to-wear and special occasion wear under labels including Victor Costa by Nahdree, Nah Nah Collections and Constance Saunders by Nahdree. It also makes private label lines through its NNP division.
He-Ro makes eveningwear and special occasion dresses and suits under the labels Niteline by Della Roufogali and the licensed Black Tie by Oleg Cassini.