WARNACO SALES PITCH INCLUDES CK BRANDS
Byline: Vicki M. Young / With contributions from Lisa Lockwood
NEW YORK — Bankrupt Warnaco Group would prefer otherwise, but it is at least contemplating a Calvin Klein-less future.
In papers filed in Manhattan bankruptcy court last week, the diversified apparel manufacturer said that it had distributed investment information concerning four of its core operations — Calvin Klein Jeans, Calvin Klein Underwear, Intimate Apparel and Authentic Fitness — to prospective buyers, some of whom have conducted preliminary due diligence and submitted preliminary bids.
In fact, sources indicated Thursday that a deal to sell Calvin Klein Jeans is close, and the buyer could potentially be VF Corp. or Phillips-Van Heusen. Executives from both firms weren’t reachable at presstime.
Warnaco has asked the court to give it a three-month extension, until July 31, for the exclusive right to file a plan of reorganization, time that could permit it to sell at least one of those major properties. Assuming Warnaco gets its extension request and files a plan of reorganization by July 31, it would then have until Sept. 30 to solicit acceptances from creditors on the plan.
Warnaco told the court that it recently “distributed draft contracts to prospective bidders” and that the due diligence process is ongoing. The filing did not elaborate on the identity of potential buyers or the “core” business units for which preliminary bids were received.
Indicating that a divestiture of one of the core operations isn’t Warnaco’s preference, a spokesman for the company said: “We remain focused on disposing our noncore assets and on exploring our restructuring options for our core businesses, which may or may not include a sale.”
Even if ongoing discussions concerning potential sales don’t come to fruition, the bids received won’t be an exercise in futility. Warnaco can use them as valuation starting points to determine the company’s worth in putting together a disclosure statement and plan of reorganization.
As reported, Calvin Klein Inc. has conducted preliminary due diligence on CK Jeans and CK Underwear. While there’s been talk about CKI forming a joint-venture partnership with a third party for the entire operation, a more likely option is having another company buy the assets outright and then work with the CKI team on design.
Asked whether Warnaco was getting close to selling Calvin Klein Jeans and Underwear, Barry Schwartz, chairman of CKI, said: “The process is still going on, and we’re talking to interested parties.”
The company completed a review of operations in late 2001, but has never disclosed details of its business plan nor indicated what core brands the company envisions retaining upon exiting bankruptcy proceedings.
As for Warnaco’s noncore businesses, the sale or liquidation process for Ubertech, A.B.S. by Allen Schwartz, Lejaby and IZKA are “well under way,” court documents said. As reported, Warnaco has already sold its GJM Sleepwear business to Luen Thai Overseas Ltd. for $10.1 million. In addition, certain nondebtor foreign subsidiaries have sold the stock of Penhaligon, a specialized fragrance retail division, to Royal Holdings Inc. for $11 million.
Barring an extension, Warnaco’s exclusive right to file a plan of reorganization would end May 8.