This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Frederick's of Hollywood to Be Taken Private

HOLLYWOOD (The Deal) -- More than 19 months after hitting the auction block and managing to steer clear of another bankruptcy, Frederick's of Hollywood Group (FOHL) has agreed to be taken private in a deal that values the once-flourishing lingerie company at almost $11 million.

A consortium, comprised of New York hedge fund Harbinger Group (HRG) subsidiary HGI Funding LCC and other common and preferred shareholders, has agreed to acquire the outstanding shares not already owned by the group for 27 cents a share, Frederick's revealed on Thursday.

The agreement represents a 50% premium over Frederick's closing price of 18 cents on Sept. 27, the day before the consortium made its initial 23 cents per share offer.

The group, which together holds 88.6% of Frederick's common stock, will essentially be paying just $1.2 million for the approximately 4.5 million shares it doesn't currently own. The agreement values Frederick's at about $10.6 million.

Must Read: Carlyle's Conway Doesn't See Taper Fallout Amid Industrial Boom

Frederick's, based in Hollywood, Calif., had already effectively handed control of the company over to Harbinger Group earlier this year, when an affiliate of HGI Funding, Five Island Asset Management, acquired its Series B convertible preferred stock for $10 million.

Frederick's, which was formed in 1947 by the creator of the pushup bra, Frederick Mellinger, put itself on the block on May 7, 2012, when it hired Allen & Co. as financial adviser to evaluate its options after receiving a number of inquiries related to various transactions.

Less than two years earlier, Frederick's had initiated a strategic review for its wholesale unit Movie Star, which was ultimately sold to Dolce Vita Intimates on Oct. 28, 2010, for an unknown price.

The outlook for Frederick's still wasn't looking very optimistic about two months ago, when, on Oct. 25, Mayer Hoffman McCann PC expressed substantial doubt about the company's ability to continue as a going concern.

The accounting firm pointed to the once-bankrupt company's recurring losses and negative cash flows from continuing operations, as well as its working capital and a shareholders' deficiency.

As of Oct. 26, Frederick's had cash and cash equivalents of just $250,000, while total debt amounted to about $24.9 million. The company has posted losses during 13 of the past 14 quarters, most recently reporting a $7.28 million loss for the first quarter ended Oct. 26.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.70 0.00%
FB $101.91 0.00%
GOOG $683.11 0.00%
TSLA $150.47 0.00%
YHOO $26.76 0.00%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs