Spiegel, the bankrupt parent company to Eddie Bauer, has filed a reorganization plan with the U.S. Bankruptcy Court that would give the companys unsecured creditors, excluding Spiegel Holdings, Inc. and its affiliates, approximately 90% of their claims through a combination of cash and common stock. Spiegel estimates that $1.28 billion in unsecured creditors claims will be satisfied under the plan. Each recovery will be roughly 52% cash and 48% equity.
At the heart of the plan is a $104 million initial cash payment to the creditors. Additionally, the Eddie Bauer business will reorganize under the name Eddie Bauer Holdings, which will operate as an independent business, with a separate board of directors independent of Spiegel. Spiegel’s creditors will receive 100% of the equity in the new company, which plans to register its class of common stock with the Securities and Exchange Commission and have its shares approved for trading on NASDAQ. All Spiegel shares will be cancelled for no consideration.
Fabian Månsson, president and CEO for Eddie Bauer, said that the retail chain has made significant progress in its restructuring activity, and the profitability of Eddie Bauer has improved “substantially.”
As part of Eddie Bauers restructuring, the company has decided to focus its resources on apparel and accessories, and switch to a licensing model for its furniture. In doing so, the company will close 34 Eddie Bauer Home stores, with the majority of the store closings expected to occur in the second half of 2005.
The company expects a hearing to be held on its disclosure statement in U.S. Bankruptcy Court on March 29, 2005. Upon approval by the Court of the disclosure statement, Spiegel stakeholders will vote on the plan.
>>>While most companies in the specialty outdoor industry dont do business with, or compete against Eddie Bauer, its always good to see a healthy company selling — and marketing — the outdoor lifestyle
