CHAUS NO LONGER LISTED ON NYSE
NEW YORK — Bernard Chaus Inc., which has traded on the New York Stock Exchange for the last 14 years, said it will seek quotation on the over-the-counter bulletin board system.
The better sportswear firm said in a statement that its stock price is below the $1 level required by the NYSE for continued listing and the retail climate has continued to be difficult.
“We have concluded that it is prudent to invest in our core business and continue to meet the needs of our retail customers, rather than to divert our resources and reduce investment in the business in an attempt to maintain our listing,” the firm said in a statement.
The firm also said existing shareholders would incur “substantial dilution” from the sale of additional equity capital for the sole purpose of attempting to maintain the NYSE listing, which requires a plan to achieve $50 million each of stockholders’ equity and market capitalization. As of June 30, stockholder’s equity was $18.3 million and market capitalization was $18.7 million
Chaus said NYSE trading is expected to be discontinued effective prior to the opening of the market on Oct. 6. The firm’s biggest shareholder is Josephine Chaus, co-founder, who owns 18.8 million shares, or an 69.5 percent stake.
The firm noted that it had adequate capital to meet its needs for the foreseeable future. “We continue to be encouraged by the consumer response to our fall products. While the retail environment remains challenging, we believe we are taking the right actions for the long-term success of the Josephine Chaus brand,” the firm said.
Shares of Chaus, which went public in 1986, closed unchanged at 56 cents Friday on the New York Stock Exchange, close to its 52-week low of 50 cents reached on Aug. 14. Its 52-week high of $2.88 was reached on Oct. 29, 1999.
In its year ended June 30, Chaus’ earnings tumbled to $192,000 from $10.8 million, with the firm blaming the promotional selling climate. Sales slid 3.7 percent to $181 million from $187.9 million.
Chaus’ just-released 10K notes that Chaus paid $848,347 to former chief executive officer Andrew Grossman in June, as part of a settlement over breach of contract arbitration. In September 1999, Grossman commenced an arbitration before the American Arbitration Association in New York seeking severance and noncompetition payments for the period from April 1, 1999, through Sept. 1, 2000, of more than $1 million.
Grossman was ceo of Chaus from November 1994 until he was dismissed in December 1998 with three years remaining on his contract. Chaus claimed Grossman was not entitled to any payments, since he took the post as chief operating officer of Giorgio Armani Corp. U.S. Grossman resigned from that post in fiscal 2000.
Chaus also paid two additional payments of $83,333 each on July 31 and August 31 to Grossman. Grossman will also recieve 2.5 percent of the $192,000 net profit, or $4,800, for the fiscal year that ended June 30, in addition, 0.42 percent of net profits for the year ended June 2001.
The 10K also notes that as of Sept. 10, the company’s unfilled orders amounted to $51.1 million, down from $62 million a year ago. Chaus’s largest customers were Dillard’s Department Stores, accounting for 42 percent of sales; May Department Stores Co., 26 percent, and TJX Cos., 13 percent.