MAIDENFORM SEEKING COURT’S OK TO HAVE BEAR STEARNS SCOUT BUYERS
Byline: Thomas J. Ryan
NEW YORK — Maidenform Worldwide Inc., which filed for Chapter 11 on July 22, is seeking court permission to retain Bear Stearns Inc. as financial adviser to look into selling the company.
The “potential sales transaction” would refer to any merger or sale under which a third party gains control of the firm, or a substantial interest, according to court papers.
The hiring of Bear Stearns comes along with continuing statements from the company that it is not for sale.
Ted Stenger, Maidenform’s president, acknowledged at a creditors’ meeting in late July that Maidenform put itself on the selling block earlier this year, but couldn’t reach an agreement with any buyers. Stenger noted at the time that while he presumed there was still interest remaining in such a deal among potential buyers, “the presumption that Maidenform is for sale would not be correct.”
On Friday, a Maidenform spokesman insisted the firm is not on the selling block.
“The company is not actively seeking a purchaser,” the spokesman said. “Any company in Chapter 11 — including Maidenform — has the responsibility to listen to any companies that approach it with the concept of an offer. Bear Stearns has worked closely with Maidenform for an extended period, and Maidenform would like to maintain its relationship in listening to and assessing those contacts.”
Bear Stearns was hired in 1996 to explore financial alternatives for Maidenform, including the options of a privately placed high-yield bond and a sale, according to court papers. However, both options were fruitless.
VF Corp. offered $240 million to buy Maidenform in March, but that deal fell through in April. Sara Lee Corp. and Warnaco Group Inc. were also said to have looked at Maidenform, but nothing materialized.
Under the latest arrangement, Bear Stearns will receive 1.25 percent of the purchase price if the company is sold, court papers noted. Bear Stearns was paid $300,000 for past work, the papers said.
The unsecured creditors committee in a court filing objected to the terms of the retention of Bear Stearns and expressed “surprise that the debtors seek to retain an investment banker at this time given statements that the debtor is not for sale at this time.”
Among the objections are that Bear Stearns would still receive payment if a sale is completed within two years after the termination of its engagement. The committee also objected to the reimbursement of Bear Stearns’ counsel.
A hearing on the retention of Bears Stearns is scheduled for Oct. 8.
Meanwhile, Maidenform reported a net loss of $5.8 million in July on sales of $18.4 million. Gross margins of 27.5 percent of sales were buried by operating expenses at 38.1 percent of sales.
The loss included $1 million in costs tied to the bankruptcy filing.
Maidenform noted, however, that results topped forecasts, which called for a loss of $8.6 million on sales of $16.1 million. The better-than-planned performance was attributed to increased sales in its wholesale business, favorable timing issues, increased efficiencies in distribution and reduced borrowings.
The filing also showed that Maidenform has run up a loss of $88.8 million for the year so far, through July. As reported, Maidenform lost $75.5 million in all of 1996 on sales of $395.8 million.