HE-RO AGREES TO MERGE WITH NAH NAH
NEW YORK — The He-Ro Group Ltd., which has been going through a liquidity crises, has signed a letter of intent to merge with Nah Nah Collections Inc.
A He-Ro spokesman said completion of the merger with Nah Nah would preclude a bankruptcy or a liquidation of He-Ro.
Under the deal, Nah Nah, best known for its suits and dresses under the Nahdree name, would receive up to 49 percent of He-Ro’s stock in return for the sale of substantially all of Nah Nah’s assets.
Following the closing, Hong J. Han, Nah Nah’s president and chief executive officer, will become president and ceo of the combined company.
It could not be learned what position Della Rounick, who has been chief executive officer of He-Ro since June 1995, would take in the combined company. Rounick, the widow of the firm’s founder, Herbert Rounick, currently owns 4.4 million shares of He-Ro, or about 66 percent of the stock.
As a condition of closing, the combined company will have to obtain an adequate bank credit line to meet both firms’ working capital needs.
The merger is still subject to due diligence by both firms, execution of definitive agreements, financing and certain third-party approvals.
In announcing the letter of intent, the companies noted that “there can be no assurance” that the transaction will be 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.
As reported, He-Ro said in its just-released 10K that unless it can refinance its debt, reduce or delay expenditures and get a capital infusion, the company may be forced to liquidate or file a bankruptcy.
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 private label through its NNP division. For spring, the company has added Constance Saunders by Nahdree, with first-year sales projected at $5 million. Nah Nah declined to disclose its overall sales volume.
He-Ro posted sales of $46.7 million last year. In the year, the company lost $8.7 million, after a $2.8 million charge, against a loss of $3.9 million in the prior year.
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.