Frederick’s of Hollywood has a new majority owner: Five Island Asset Management, a unit of New York investment firm Harbinger Group Inc. now has a controlling stake in the Los Angeles lingerie maker.
Five Island has bought 40 million shares of the company at 25 cents per share in a $10 million transaction.
“This $10 million capital infusion will play an important role in stabilizing our business and will allow us to improve sales by maintaining appropriate inventory levels," Thomas Lynch, chief executive of Frederick’s, said in an announcement on Friday.
The deal gives Five Island the right to appoint at least two directors to the company’s board. The deal was handled by law firm Milbank Tweed Hadley & McCloy LLP in New York.
The cash-strapped lingerie brand has been exploring strategic alternatives, including a potential sale, since May last year.
Frederick’s stock was unchanged Monday at 20 cents a share on the OTCQB Marketplace.