SIRENA GETS COURT OK OF PLAN, WILL LEAVE CH. 11 IN TEN DAYS
Byline: Kristi Ellis
LOS ANGELES — Sirena Apparel Group, the swimwear company forced to downsize in the wake of bankruptcy, received court confirmation of its reorganization plan on Monday and will emerge from Chapter 11 in the next 10 days after a 13-month stay.
The company secured a credit facility from Foothill Capital of $25 million to $27 million as part of the reorganization, according to Brian Zientek, Sirena’s chief executive officer.
“Many people said that we couldn’t do it, but we have succeeded,” said Zientek in an interview on Tuesday. “Now the real work begins.”
As part of the reorganization, Sirena becomes a privately held company owned by three parties. Unsecured creditors own 55 percent; Foothill Capital, which took an equity position, holds 30 percent, and the balance was put aside for management incentives. At the time of its filing, bankruptcy court documents showed $17 million owed to Foothill and $8 million owed to unsecured creditors.
Concurrently, Sirena’s Liz Claiborne and Elisabeth (plus-size) licenses have been extended through June 30, 2002. The original agreement was through June 30, 2001.
“The Sirena team has done a great job of steering through this difficult period and happily our consumer voted very positively for our product at retail this season,”said Barbara Friedman, president of licensing for Liz Claiborne Inc., in a statement. “Sirena’s emergence from Chapter 11 before the August market, coupled with great design for our Liz Claiborne and Elisabeth swimwear brands, will ensure an even more successful cruise 2001 for our licensing partners.”
In addition to the licensed Liz Claiborne and Elisabeth lines, Sirena continues with two of its own labels: Sirena swimwear and Wear Abouts cover-ups. Private label rounds out the business.
Zientek noted that plans to sell its Jezebel/Renee Hollywood intimate apparel division have changed. He said he is in discussions to license the brand, though he isn’t ruling out a sale. “I prefer to license the label because the name is terrific and there are great opportunities to utilize it in the future,” he said.
Sirena acquired Jezebel in February 1998 as an entry into intimate apparel and a means to diversify its core swimwear business.
Zientek said Sirena ended its fiscal year on June 30 with a volume of $32 million. He also projected sales for fiscal year 2001 of $32 million to $34 million. At its peak, Sirena posted sales of $51 million, Zientek said.
“Orders have doubled or tripled over last year, which is when we entered bankruptcy, and it might not be a sign of the future but it’s very helpful,”said Zientek.
He noted that the company’s private label business has been the “most volatile.”
“The big private label users stayed away in droves and were really reluctant to make investments last year,” said Zientek. “We have already received orders from some and we expect good growth in that area,” he added.
Sirena also plans to aggressively pursue the licensed Elisabeth plus-size business by treating it as its own division with a separate open-to-buy.
The company started its downward spiral last June with the dismissal of two executives. Maurice (Corky) Newman as chairman and ceo and chief financial officer Richard Gerhardt left amid reports that the company had issued misleading financial statements. No charges were ever filed against either executive.
The company filed for Chapter 11 bankruptcy protection on June 25 of last year.