Wells Fargo might be more amenable to the stalking horse bid by Emerisque for bankrupt Hartmarx Corp. now that the British private equity firm has raised its offer, according to sources.
This story first appeared in the June 2, 2009 issue of WWD. Subscribe Today.
A hearing for the stalking horse bid took place Monday and was scheduled to continue today. Sources present at the hearing said Wells Fargo, the lead agent for the banking group that has provided financing of more than $114 million to Hartmarx, is moving closer to an agreement to court approval of Emerisque as the stalking horse. The stalking horse establishes a baseline in a court-approved auction for better offers.
Emerisque, along with SKNL North America, had an offer of $119 million on the table, including the assumption of liabilities. Wells Fargo on Friday objected to the Emerisque bid on grounds ranging from inadequate financing to the bidder’s lack of commitment to Hartmarx employees. Emerisque in turn sharply rebuked the objection, stating that the bank group was just seeking a higher bid and reaffirming its intention to keep production jobs in the U.S., a concern of union officials and lawmakers who have been applying increasing pressure on Wells Fargo to allow the sale of the company and not press for a liquidation.
Although sources said late Monday that Emerisque had raised its bid, the revised amount couldn’t be learned at press time. The expectation is that it was the cash component of the offer, originally $70.5 million, that was increased.
A spokeswoman for Wells Fargo declined comment late Monday.
Meanwhile, Edgar Romney, president of Workers United, the union that represents Hartmarx’s workers governed under collective bargaining agreements, on Friday sent a letter to the bankruptcy court judge overseeing the case in support of the bid by Emerisque. The union in addition sent members to stage a rally outside the courthouse on Monday in support of the bid.
Hartmarx filed for Chapter 11 bankruptcy protection in Chicago in January.