Spiegel Inc., the bankrupt catalog retailer, Friday said it plans to reorganize around its profitable Eddie Bauer division and form a new parent company, Eddie Bauer Holdings Inc.
Spiegel, which had previously tried to sell Eddie Bauer, said it will close all 34 of its Eddie Bauer Home stores in the second half of 2005.
It said it has filed its proposed reorganization plan with federal bankruptcy court in New York to move it a step closer to completing its restructuring.
Spiegel said Eddie Bauer will continue to sell outdoor-inspired clothes, gear and home furnishings through its 418 stores, catalogs and the Internet. It will be headquartered in Redmond, Washington.
Bill Kosturos, Spiegel's interim chief executive officer and managing partner in turnaround specialist Alvarez and Marsal, said the reorganization plan values Eddie Bauer at $865 million. He said the company took Eddie Bauer off the selling block because buyers were not offering what Spiegel executives thought the company was worth.
"We are very confident in Eddie Bauer going forward," Kosturos said. "This has just been a home run for everyone."
He said the plan represents extensive collaboration between the company's creditors and its majority shareholder.
Downers Grove, Illinois-based Spiegel filed for bankruptcy in March 2003 in a move analysts attributed to huge losses in Spiegel's credit card business and because Eddie Bauer brand's no longer had the kind of cachet that had allowed it to charge premium prices in the causal apparel market.
Spiegel last April put the Eddie Bauer unit up for sale after the parent company failed to strike a deal with creditors to restructure the company.
Under the reorganization plan, general unsecured creditors, excluding Spiegel Holdings Inc. and its affiliates, would recover about 90 percent of their claims through a combination of cash and common stock, Spiegel said.
The company estimated about $1.28 billion of general unsecured creditors' claims would be met this way and said creditors, with some exclusions, would initially receive 100 percent of the equity in the new company.
Spiegel said it expects a hearing to be held on its disclosure statement in bankruptcy court on March 29.
