Phoenix Footwear Group Inc said it sold its Altama military footwear division to Tactical Holdings Inc, the owner of Wellco Enterprises, as part of a plan to develop a core group of brands. This follows the sale of Royal Robbins to Kellwood last year.
The footwear maker will get about $15 million under the deal, including $14.25 million on or before Feb. 28. The net proceeds will be used to cut its bank debt, it said in a statement. Carlsbad, California-based Phoenix had acquired Altama Delta Corp in 2004 for about $35.3 million, adjusted for a settlement with the former owner of the company.
In 2007, Phoenix sold its Royal Robbins unit and related business assets to Kellwood Co. for about $40 million.
The net proceeds from the Altama sale will be applied to the reduction of Phoenix Footwear's bank debt.
Commenting on the transaction, James Riedman, Phoenix Footwear's Chairman, said, “The sale of Altama is an important part of continued improvements to our capital base. In addition to the direct cash it raises, it is expected to offset all of the capital taxes which arose from our gain earlier in the year with our Royal Robbins divestiture. The net effect of the sale and tax benefits should be to largely extinguish our debt by the end of fiscal 2008 in the absence of any extraordinary events. We believe this step enhances our prospects and allows us to concentrate on generating shareholder returns with our remaining brands.”
Cathy Taylor, Chief Executive Officer of Phoenix Footwear Group, Inc., said, “Altama's divestiture completes the planned restructuring of our portfolio of businesses. This transaction is part of our overall strategic plan to develop a core group of brands representing key channels of distribution, price points and gender in the footwear and accessories categories. We believe that H.S. Trask and Tommy Bahama represent tremendous growth opportunities in the better, lifestyle brand category while Softwalk and Trotters give us solid businesses in the moderate women's footwear category. Chambers continues to be a solid contributor with continuing growth in our Wal-Mart business and is being actively developed to support our in-house footwear brands along with the new Lee licensing opportunity in the moderate channels of distribution.”
“We are clearly gaining momentum in our remaining core businesses. Based on this and our other operational and organizational initiatives I am encouraged with the outlook for fiscal year 2008 and expect us to be profitable for the full year.”
Phoenix Footwear also said it will report an operating loss for the fourth quarter ended December 29, 2007. For fiscal year 2008, Phoenix Footwear expects to generate sales in the range of $95 million to $100 million and income from operations in the range of $2.0 million to $2.5 million.
