WARNACO’S NEW FAN: SID BASS PLUNKS DOWN $48M FOR 8.5% STAKE
Byline: Lisa Lockwood
NEW YORK — Linda Wachner might be under siege from certain irate Warnaco shareholders, but she has one big, powerful booster who’s taken a significant stake in the company: Sid Bass.
The Texas billionaire quietly bought an 8.5 percent stake in Warnaco Group last month, amounting to 4,524,900 shares. Bass’s investment partnership made the purchase on April 5 and filed the required 13G with the Securities & Exchange Commission on April 14. Based on Warnaco’s closing stock price April 5 of 10 11/16, Bass paid about $48.4 million for his stake.
“He told me he made the investment, and we’re thrilled. We couldn’t have a better investor,” said Wachner, chairman and chief executive officer of Warnaco, Monday.
Wachner declined to say whether she and Bass knew each other socially.
“He bought the stock for investment purposes. Obviously he likes Warnaco stock, because he bought 8.5 percent of it,” she added.
Warnaco’s largest institutional shareholder is Fidelity, which owns 13.2 percent, according to a March 23 proxy. Wachner is the largest personal owner. Her beneficial ownership, which includes options, is 20.6 percent.
Warnaco’s stock, which has slid dramatically in the past year-and-a-half, hit a new 52-week low on Monday, when it closed at 8 1/4, down 5/8, after briefly dipping below 8 during midday trading. Warnaco’s 52-week high is 30 5/8.
Over the years, the Bass family has been known to take advantage of falling share prices and has spent millions of dollars to increase its stakes in companies with beaten-down stocks.
Bass, who keeps a low profile, couldn’t be reached for comment Monday. However, he did attend Warnaco’s contentious annual meeting here last week, where shareholders had blistering complaints about the company’s performance.
During the meeting last Thursday, shareholders criticized Warnaco’s underperforming stock, as reported in these columns. They also complained about Wachner’s continued high levels of compensation, despite the stock’s dramatic slide. Wachner’s 1999 pay dropped to $7.7 million from $17.2 million a year ago, because the company elected to award her no bonus. Before storming out of the meeting, Leon G. Cooperman, who owns 7.3 percent of Warnaco stock, said, “Markets are efficient. Our stock is at 10 1/4 and doesn’t rally when the market goes up. There is something wrong with the market’s perception of us. You can’t stick your head in the ground.”
Bass, who has parlayed his inheritance into a net worth of $3.5 billion, was ranked 63rd on the Forbes list of “400 Richest People in America” last year, at the age of 56. A native of Fort Worth, Texas, Bass is one of Disney’s largest shareholders and has holdings ranging from real estate and insurance companies to satellite radio, casino/resorts, crude petroleum, natural gas and media.
Bass is the great-nephew of Sid W. Richardson, who made his fortune in oil, cattle and land.
Bass was instrumental in helping Michael Eisner turn Disney’s fortunes around in the Nineties. In fact, when Disney announced it was buying ABC in 1995, Bass sat on the podium with Eisner.
In addition to his numerous investments, Bass also owns a substantial amount of land in downtown Fort Worth, and has even hired a private security force to patrol the area. He has worked to revitalize the city and has had success there, attracting more theaters and restaurants to the downtown area. Among the Basses’ real estate ventures are Lake Las Vegas Resort, an enormous casino-resort 17 miles east of the Las Vegas strip; Lake Arrowhead, a 5,000-acre resort in Southern California; Waikoloa, a 3,100-acre resort on the Island of Hawaii, and several thousand acres at McCormick Ranch in Scottsdale, Ariz.
He also runs the venture-capital firm Buena Venture Associates, which has a stake in Lexica, an online insurance company. Another of his companies invested in CD Radio, a satellite radio company.
He and his wife, Mercedes — regulars on the social circuit — have a lavishly furnished mansion in Fort Worth in addition to their New York apartment. They are active supporters of the Fort Worth Symphony and the Nancy Lee and Perry R. Bass Performance Hall in Fort Worth, which opened two years ago and is named for Sid’s parents.
In Bass’s filing with the SEC, the controlling persons were listed as P-66 Genpar LP, a Texas limited partnership; Carmel Land & Cattle Co., a Texas corporation; William P. Hallman Jr. (sole shareholder of Carmel); P-66 Inc., a Texas corporation; The Sid R. Bass Management Trust, a revocable trust existing under the laws of the state of Texas, and Sid R. Bass.
The filing certifies that . . . the securities. . . were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.”
As reported in these columns, Warnaco warned analysts and shareholders last Friday that its 2000 earnings would fall about 50 cents short of Wall Street estimates. Clearance markdowns to reduce inventories, largely in intimate apparel, are expected to reduce its earnings target for this year to $1.80 a share, Warnaco said. Wall Street’s consensus estimate had been $2.33. In 1999, Warnaco earned $1.72 a share.
Net earnings for the quarter, boosted by the sale of its investment in Interworld, an e-commerce developer, jumped 24.8 percent to $28.6 million, from $22.9 million. Net revenues for the quarter climbed 36.7 percent to $607 million from $444.1 million, driven by acquisitions last year of Authentic Fitness Corp., the Chaps Canadian license and ABS by Allen B. Schwartz. Excluding $161 million in sales from the purchases, sales inched up 0.4 percent.
“I’m feeling great,” Wachner said Monday. “I think we did all the right things and our business is good.”