KHEPRA SEES RELIEF
Byline: Vicki M. Young
NEW YORK — Khepra Beauty Group’s 18-month stay in bankruptcy proceedings could end on Oct. 30, when a proposed $3.4 million sale of Khepra’s assets to Riviera Concepts of America Inc. is scheduled for approval.
Khepra, which signed the deal with Riviera on Sept. 15, would get $2,750,000 in cash to pay its creditors. Riviera would assume $650,000 in liabilities.
The sale would give Riviera the Adrienne Vittadini license and the U.S. distribution rights to the Dolce & Gabbana, Moschino and Joseph Abboud beauty brands, which are owned by Euroitalia. Riviera would also take over Khepra’s position as sales agent for the Michel Germain products.
According to court papers, Byron D. Donics, Khepra’s chairman, will become a senior executive and 15 percent owner of the new Riviera entity. The 15 percent could increase to 20 percent if certain financial targets are met between Nov. 1997 and Nov. 1999.
Donics told WWD that Khepra will become a division of Riviera, but a name has not been selected yet.
According to court papers, unsecured creditors are expected to get 25 cents on the dollar, with a total cash payment cap of $836,500. The recovery to unsecured creditors could decrease, however, if priority creditor claims exceed $217,000. The priority creditors’ claims are $7,000 due to the Internal Revenue Service and an estimated $210,000 in wages and commissions.
For the four-week period ended August 31, Khepra reported operating income of $145,000 on sales of $833,000. After interest and reorganization costs, Khepra had a $47,000 profit.
Reached in Italy, executives at Euroitalia said there are no plans for a U.S. distribution change. “Our agreement with Khepra runs through the end of the year and we continue to work with the distributor,” said Claudio Tenan, export manager. “We are not speaking to other potential distributors and have not explored other opportunities.”
He declined comment on past speculation about the possibility of Euroitalia establishing its own U.S. subsidiary.