RUSSE BID WINS RAMPAGE
Byline: Kristi Ellis
LOS ANGELES — Charlotte Russe won the bidding war with Wet Seal Inc. for 15 Rampage Clothing Co. stores in U.S. Bankruptcy Court last week with an offer of approximately $10 million.
Charlotte Russe’s bid consists of $1.1 million in cash to settle claims, $5.2 million in cash, the assumption of $3.5 million in equipment leases and $300,000 in licensing royalties in the first four years. The stores are currently operating under the Rampage and Friends names. It couldn’t be learned how Charlotte Russe will operate the stores.
The sale still must be approved by bankruptcy court. Other bidders could come in with higher offers.
Wet Seal, which made an offer to purchase 17 of Rampage’s 25 stores in July, had planned to spend approximately $5 million and formally withdrew its offer last week.
The unsecured creditors’ committee had opposed the Wet Seal deal because, the committee said, it provided no return to these creditors.
Charlotte Russe, a San Diego-based chain of 37 junior stores, which does an annual volume estimated at $70 million, was bought in October by Saunders Karp & Megrue, a money management firm based in New York.
Brad Godshall, an attorney representing the unsecured creditors’ committee, said the committee supports the Charlotte Russe deal. “We are pleased with the price,” Godshall said.
Urban Outfitters was said to be looking at the Rampage sites at one time, but has lost interest, according to sources.
Rampage’s retail operation, which includes the Rampage, Friends and Judy’s chains, did a combined $57 million in sales last year in 45 stores. The company has closed 20 stores since filing for Chapter 11 June 19.
Rampage Clothing Inc. and Rampage Retailing Inc., its sister company that runs the stores, filed separate Chapter 11 petitions after negotiations broke down with creditors for an out-of-court settlement. Rampage Retailing’s petition listed assets of $23.5 million and liabilities of $32.5 million, of which $26 million were unsecured. Rampage Clothing listed assets of $54 million and liabilities of $61 million, of which $25 million were unsecured.
Michelle Hansel, Rampage’s director of licensing, reached by phone this week, said the firm plans to close seven of the 10 stores that will remain after the sale. These stores all operate as Friends units.
However, Hansel claimed the company is moving ahead on the licensing front. She said Rampage plans to sign six to eight licensing deals in the next month for children’s wear, denim, outerwear, eyewear, handbags, shoes and hair accessories.
Court papers show the Hansel family members who operate the company are taking a big pay cut this year, and the unsecured creditors’ committee wants them to earn even less.
For 1996, Larry Hansel earned $1.2 million and received $50,000 in monthly rents from the company for use of property he owns; his sisters, Bridgette Andrews, president, and Michelle Hansel, director of licensing, earned $733,264 and $122,349, respectively. Andrews also received $5,000 in monthly rent. For 1997, Larry Hansel asked approximately $675,000 in salary plus $50,000 in monthly building rent, Andrews requested $360,000 plus $5,000 in monthly building rent and Michelle Hansel requested $204,000.
The unsecured creditors’ committee filed opposition papers to the salary requests.
“We felt that the salaries they were requesting were excessive,” Godshall said. He said the committee has entered a stipulation with the three permitting them to earn an aggregate of $800,000 annually. The issue will be revisited by the court at a hearing Nov. 18.