AILEEN MAY HAVE TO SHUT OR SELL
NEW YORK — Aileen Inc., operating in Chapter 11 since last Jan. 24, said it may be forced to either shut down or sell all or part of the company.
Aileen said that unless waivers are granted for its credit facility, it’s possible the shutdown could come as early as the end of February when the anticipated sales shortfall is expected to trigger violations of its financial covenants.
One covenant the company expects to violate is the $11 million net worth value required under its agreement with Sterling National Bank & Trust, here.
“With losses continuing through the fall and winter months, the company will cease to be in compliance with the net worth and perhaps other covenants and will seek waivers of such defaults,” the company said in a statement.
The firm explained that it hopes to propose a plan of reorganization before its exclusivity period expires on April 15.
It said, however, it may seek bankruptcy court approval to retain an investment banking firm to examine “various strategic alternatives, which could include the sale of all or parts of the company.”
At the same time, Aileen, which makes women’s apparel and operates manufacturer outlet stores, reported a net loss of $10.5 million for the first 11 months of fiscal 1994. Full results for the fiscal year ended Oct. 29 are expected to be released in mid-January.
Sales in the year fell 11.3 percent to $54 million from $60.8 million, and same-store sales declined 9.8 percent. Comparable-store sales statistics for the fiscal year reflect the 87 stores that were open throughout fiscal 1993 and 1994. At the end of fiscal 1994, the firm had 116 stores, compared with 144 a year earlier.
The firm reported that it saw an 11.2 percent gain in same-store sales in November, but December brought a falloff in activity, with the first four weeks showing a gain of only 2.8 percent. The firm said management is concerned that “December sales have fallen short of anticipated levels.” — Fairchild News Service