Investor Plans Exit From Frederick’s
By DEBORAH BELGUM
Newport Beach-based Wilshire Partners’ work is done at Frederick’s of Hollywood Inc.
The lingerie retailer filed a reorganization plan earlier this month that calls for it to emerge from bankruptcy in October under new ownership.
Wilshire Partners bought Frederick’s from Chicago’s Knightsbridge Capital Corp. in 2000, just before the Hollywood-based retailer filed for bankruptcy protection. Wilshire, a private equity firm, is set to give up its majority stake under the reorganization plan.
The plan calls for lenders headed by France’s Credit Agricole Indosuez to convert $15 million of debt into an 80% stake in the business. Unsecured creditors, which number between 200 and 300, will have their $15 million in debt converted into a 6% stake. The balance of the company’s ownership is to be set aside for stock options, grants or warrants for management.
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 2000. Irvine-based turnaround firm Crossroads LLC has worked with Frederick’s for the past two years.
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.
The retailer has been working to overcome its own missteps as well as competition from Limited Brands Inc.’s Victoria’s Secret.
An approval hearing for the plan has been scheduled for Sept. 4, and a confirmation hearing is set for sometime in mid-October.
Belgum is a staff writer with the Los Angeles Business Journal
