LESLIE FAY CONSIDERS PROPOSAL
Byline: Jennifer Weitzman
NEW YORK — The board of The Leslie Fay Co. will meet on Friday to mull an offer from a New York-based investment firm to purchase the rest of its outstanding shares.
On Tuesday, the New York-based firm announced Three Cities Funds, which bought 60 percent of Leslie Fay in August 1999 at $7 a share, made an offer to retire the remaining 2 million outstanding shares at $3.50. If the deal is approved and consummated, Leslie Fay would then become a privately held company.
John Ward, president and chief executive, said in a statement: “This proposal will be presented to the company’s board of directors. However, at this time no decision to accept or reject the proposal has been made.”
Wall Street reacted favorably to the news, with shares up 41 cents to $3.16. The company reached a new 52-week low Jan. 3, closing at $2.75.
The New York-based moderate apparel company, in operation since 1947, has had its share of financial woes in recent months. For its third-quarter results, its most recent, Leslie Fay came in with sales $4.8 million below the prior year’s level, when excluding sales from the Liz Claiborne Dress license that it acquired in February and from the Cynthia Steve business acquired in May. The company’s profits sank to $760,000, or 15 cents a share, in the quarter from $3.1 million, or 52 cents.
Ward said the problems mostly stemmed from higher levels of off-price selling, primarily in the Warren brands. Sales were also soft, as expected, in its sportswear division due to the decision reached in March to combine Leslie Fay sportswear and Haberdashery by Leslie Fay into a single product offering.
Robert Wright, a partner of Three Cities, said: “We own a big position in the company and have been happy with our investment.”
Wright said the deal would leave Leslie Fay’s management alone, for now: “It is an important incentive for the existing management team to own a piece of the business they are running.”
Asked about investing further in an apparel company in the midst of a difficult environment, Wright said that “businesses have their ups and downs, but we like the business and are happy investors.”
Warren Wishart, Leslie Fay’s chief financial offer, said that Three Cities’ proposal to buy the rest of its outstanding shares “confirms [Three Cities’] continued interest in Leslie Fay.”
Looking ahead, Wishart said more significant financial backing will bring more stability. But he added: “We still have to make the clothes and make the profit.”