Ahead of the Bell: Frederick's of Hollywood -- February 4, 2010
04 Febrero 2010 - 7:35AM
Marketwired
Stock Market Alerts' performance stock list includes: Frederick's
of Hollywood Group Inc. (AMEX: FOH), Citi (NYSE: C), Motorola, Inc.
(NYSE: MOT) and Home Diagnostics Inc (NASDAQ: HDIX).
Yesterday after the markets closed Frederick's of Hollywood
Group Inc. (AMEX: FOH) issued a press release announcing that it
has entered into an agreement to exchange, at a 50% discount,
approximately $22.6 million of outstanding debt and preferred stock
for approximately $11.3 million in common stock. The agreement was
made with certain accounts and funds managed by and/or affiliated
with Fursa Alternative Strategies LLC ("Fursa"), who are the
holders of the Company's outstanding Tranche C Debt and Series A
Preferred Stock, as well as one of the Company's largest common
shareholders. The balance sheet effect of the transaction will
increase shareholders' equity by approximately $22.6 million.
Fursa has agreed to exchange the Tranche C Debt, with an
aggregate principal amount and accrued interest of approximately
$14 million, and to convert approximately $8.6 million of Series A
Preferred Stock and accrued dividends, into an aggregate of
approximately $11.3 million in common stock. The effective
conversion price per share will be calculated based on the volume
weighted average price of the Company's common stock for ten
trading days, including the five days prior to and the five days
including and after today's announcement. Upon the closing of the
transaction, the Company will also issue to Fursa three, five and
seven-year warrants, each to purchase 500,000 shares of common
stock at exercise prices of 150%, 175% and 200% of the conversion
price, respectively, but not less than the closing sale price of
the common stock on the closing date. All of the shares of common
stock owned by Fursa upon completion of the transaction will be
subject to a 12 month lock up agreement, subject to early release
for a certain number of shares.
"Clearing our balance sheet of the Tranche C Debt and Series A
Preferred Stock is a game changer for Frederick's of Hollywood. I
want to thank Fursa, one of our largest, longstanding shareholders
for their continued support of the Company and the confidence this
agreement shows they have in our turnaround strategy," stated
Thomas Lynch, the Company's Chairman and Chief Executive Officer.
"Through this transaction, we are effectively repurchasing our
outstanding long-term debt and preferred stock at a 50% discount.
As a result, we will have significantly strengthened our balance
sheet by increasing shareholders' equity by $22.6 million,
eliminated further interest and dividend accruals and positioned
our company to fully capitalize on our anticipated growth
opportunities in the coming year."
The transaction is subject to shareholder approval and other
customary closing conditions. The Company anticipates holding an
annual meeting of its shareholders during the third fiscal quarter
ending April 24, 2010, at which shareholders will be asked to
approve the transaction. The Company expects to consummate the
transaction as soon as practicable once shareholder approval is
obtained. Fursa has agreed to "sterilize" their vote by committing
to vote their shares of the Company's common stock and preferred
stock at the shareholder meeting on this matter in accordance with
the vote of a majority of votes cast at the meeting, excluding the
shares held by Fursa.
The stock closed yesterday at $1.43 a share.
For an in-depth profile of Frederick's of Hollywood Group, visit
http://www.wallstreetnewsalert.com/view-company-profiles.php?profile=FOH_020310.
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Citi (NYSE: C) down 1.1% on 272 million shares traded. Citi, the
leading global financial services company, has approximately 200
million customer accounts and does business in more than 140
countries.
Motorola, Inc. (NYSE: MOT) up 2.1% on 75.5 million shares
traded. Motorola is known around the world for innovation in
communications and focused on advancing the way the world
connects.
Home Diagnostics Inc (NASDAQ: HDIX) up 89.2% on 14.8 million
shares traded. Home Diagnostics Inc. is a leading developer,
manufacturer and marketer of diabetes management products.
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