Frederick's Ready To Emerge Out of Long Bankruptcy
Retail by Deborah Belgum
Frederick's of Hollywood, venerable purveyor of naughty and nice lingerie, plans to emerge from bankruptcy by the end of October with new ownership.
The company, which has met with stiff competition in recent years from Victoria's Secret, filed a reorganization plan on Aug. 9 with the U.S. Bankruptcy Court in Los Angeles outlining how the company will emerge from bankruptcy.
"This is not the easiest thing I've done," said Linda LoRe, who arrived in 1999 as Frederick's chief executive and president and will be staying under the reorganization.
The plan calls for the principal lender groups, headed by Credit Agricole, to convert $15 million of debt into an 80 percent stake in the business. Unsecured creditors, which number between 200 and 300, will have their $15 million in debt converted into a 6 percent equity stake in the company. The balance will be reserved for stock options, grants or warrants for company management.
When the company filed for protection, it was owned by an Orange-County based investment group, Wilshire Partners, which is giving up its stake.
The company, seeking relief from a heavy debt load taken on as part if its 1997 switch from a public to private company, filed for Chapter 11 protection in July 2000.
In its filing, Frederick's listed $70 million in liabilities and $38 million in assets, not including intellectual property and trademarks valued at $32 million, said Michael Tuchin, its bankruptcy counsel.
An approval hearing for the plan has been scheduled for Sept. 4, and a confirmation hearing is set for sometime in mid-October.
Frederick's original approval hearing was set for Sept. 12, 2001. But after Sept. 11, the investors who wanted to buy the company, TGV/Cerberus Group, balked, LoRe said.
Lean and Hungry
A second deal to buy the Hamburger Hamlet chain from Orange County-based Prandium Inc. has fallen through.
Brad Gluckstein, the real estate investor behind the popular Conga Room nightclub, had planned to buy the 14-restaurant chain for $15 million. But Prandium, which also operates Chi-Chi's Mexican Restaurants and the Koo Koo Roo chain, said the deal with Gluckstein's Latin Intellectual Properties Inc. had been terminated.
"I would say the buyer was unable to fulfill the terms of the contract," said Robert L. Carl, Prandium's vice president of investor relations.
Gluckstein was on vacation and did not return calls.
Randall Hiatt, a restaurant consultant with Fessel International, speculated that Gluckstein probably couldn't come up with the financing, just like another suitor, Othello Holding Corp., which had offered to buy the chain for $16.1 million in cash. "The chain has good locations, but it's an old concept that doesn't set the world on fire," Hiatt said.
Staff reporter Deborah Belgum can be reached at (323) 549-5225 ext. 228, or at email@example.com.
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