Attached files
| file | filename |
|---|---|
| 8-K - FREDERICK'S OF HOLLYWOOD GROUP INC /NY/ | v173263_8k.htm |
| EX-10.1 - FREDERICK'S OF HOLLYWOOD GROUP INC /NY/ | v173263_ex10-1.htm |
EXHIBIT
99.1
FOR IMMEDIATE
RELEASE:
Frederick’s
of Hollywood Group Inc. Enters Into Agreement to Extinguish
$22.6
Million in Debt and Preferred Stock
—
New York, New York – February 2, 2010
— Frederick’s of Hollywood Group Inc. (NYSE Amex: FOH) (“Company”) today
announced that it has entered into an agreement to exchange, at a 50% discount,
approximately $22.6 million of outstanding debt and preferred stock for
approximately $11.3 million in common stock. The agreement was made
with certain accounts and funds managed by and/or affiliated with Fursa
Alternative Strategies LLC (“Fursa”), who are the holders of the Company’s
outstanding Tranche C Debt and Series A Preferred Stock, as well as one of the
Company’s largest common shareholders. The balance sheet effect of
the transaction will increase shareholders’ equity by approximately $22.6
million.
Fursa has
agreed to exchange the Tranche C Debt, with an aggregate principal amount and
accrued interest of approximately $14 million, and to convert approximately $8.6
million of Series A Preferred Stock and accrued dividends, into an aggregate of
approximately $11.3 million in common stock. The effective conversion
price per share will be calculated based on the volume weighted average price of
the Company’s common stock for ten trading days, including the five days prior
to and the five days including and after today’s announcement. Upon
the closing of the transaction, the Company will also issue to Fursa three, five
and seven-year warrants, each to purchase 500,000 shares of common stock at
exercise prices of 150%, 175% and 200% of the conversion price, respectively,
but not less than the closing sale price of the common stock on the closing
date. All of the shares of common stock owned by Fursa upon
completion of the transaction will be subject to a 12 month lock up agreement,
subject to early release for a certain number of shares.
“Clearing
our balance sheet of the Tranche C Debt and Series A Preferred Stock is a game
changer for Frederick’s of Hollywood. I want to thank Fursa, one of
our largest, longstanding shareholders for their continued support of the
Company and the confidence this agreement shows they have in our turnaround
strategy,” stated Thomas Lynch, the Company’s Chairman and Chief Executive
Officer. “Through this transaction, we are effectively repurchasing our
outstanding long-term debt and preferred stock at a 50% discount. As
a result, we will have significantly strengthened our balance sheet by
increasing shareholders’ equity by $22.6 million, eliminated further interest
and dividend accruals and positioned our company to fully capitalize on our
anticipated growth opportunities in the coming year.”
“We
believe that the iconic Frederick’s of Hollywood brand and the new management
team’s turnaround strategy are a winning combination,” stated William Harley,
Fursa’s Chief Investment Officer. “The progress that Tom Lynch and
his team have made in just under a year is impressive. By removing
the added pressures that the debt and preferred stock place on the company,
Frederick’s of Hollywood will be able to concentrate more of its resources on
its business and provide a stronger foundation for long-term
growth.”
The
transaction is subject to shareholder approval and other customary closing
conditions. The Company anticipates holding an annual meeting of its
shareholders during the third fiscal quarter ending April 24, 2010, at which
shareholders will be asked to approve the transaction. The Company
expects to consummate the transaction as soon as practicable once shareholder
approval is obtained. Fursa has agreed to “sterilize” their vote by
committing to vote their shares of the Company’s common stock and preferred
stock at the shareholder meeting on this matter in accordance with the vote of a
majority of votes cast at the meeting, excluding the shares held by
Fursa.
Forward Looking
Statement
Certain
of the matters set forth in this press release are forward-looking and involve a
number of risks and uncertainties. These statements are based on
management’s current expectations or beliefs. Actual results may vary
materially from those expressed or implied by the statements
herein. Among the factors that could cause actual results to differ
materially are the following: competition; business conditions and industry
growth; rapidly changing consumer preferences and trends; general economic
conditions; large variations in sales volume with significant customers;
addition or loss of significant customers; continued compliance with government
regulations; loss of key personnel; labor practices; product development;
management of growth, increases in costs of operations or inability to meet
efficiency or cost reduction objectives; timing of orders and deliveries of
products; foreign government regulations and risks of doing business abroad; and
the other risks that are described from time to time in Frederick’s of Hollywood
Group Inc.’s SEC reports. Frederick’s of Hollywood Group Inc. is
under no obligation to, and expressly disclaims any obligation to, update or
alter its forward-looking statements, whether as a result of new information,
future events, changes in assumptions or otherwise.
About Frederick’s of
Hollywood Group Inc.
Frederick’s
of Hollywood Group Inc. conducts its business through its multi-channel retail
division and wholesale division. Through our multi-channel retail
division, we primarily sell women’s intimate apparel and related products under
our proprietary Frederick’s of Hollywood® brand
through 132 specialty retail stores nationwide, our world-famous catalog and an
online shop at www.fredericks.com. With
its exclusive product offerings including Seduction by Frederick’s of Hollywood
and the Hollywood Extreme Cleavage® bra,
Frederick’s of Hollywood is the Original Sex Symbol®. Through
our wholesale division, we design, manufacture, source, distribute and sell
women’s intimate apparel throughout the United States and Canada.
Our press
releases and financial reports can be accessed on our corporate website at www.fohgroup.com.
This
release is available on the KCSA Strategic Communications Web site at www.kcsa.com.
CONTACT:
Frederick’s
of Hollywood Group Inc.
Thomas
Rende, CFO
(212)
798-4700
Investor
Contacts:
Todd
Fromer / Garth Russell
KCSA
Strategic Communications
212-896-1215
/ 212-896-1250
tfromer@kcsa.com
/ grussell@kcsa.com
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