Eddie Bauer Holdings (fka EBHIQ)

[Trops]

TM,Here is the deal from late 06.Whomever buys the company will get a steal as compared to 06.Even if the deal is a third of the last deal we should get a nice price.Based on the low cap as compared to the dogs in the industry we could get to 1.25-3.00+ either on the buyout or just playing catch up to our doggie peers at a 50+ mill cap.I did not have time to look at the potential buyers yet.Just a realistic projection based on all factors outside the technicals.On the technical side a run into the powerzone for a few days would probably take us above the 1.22 breakpoint on the charts and land us in my range.Imo~FYI
Tuesday, November 14, 2006

Eddie Bauer sells itself to buyout firms
$286 million deal an 'investment in a brand identity'

P-I STAFF AND NEWS SERVICES

Eddie Bauer Holdings Inc., the venerable but financially struggling outdoor-clothing retailer, has been sold.

Two buyout firms announced Monday that they would pay $286 million in cash, or about one-third of Eddie Bauer's share price when it exited bankruptcy last year.

Private equity firms have spent at least $18 billion buying retailers this year.

Sun Capital Partners Inc. and Golden Gate Capital will pay $9.25 a share in cash for the 380-store chain and will assume $328 million in debt, the companies said. Redmond-based Eddie Bauer emerged from Spiegel Inc.'s bankruptcy reorganization as a stand-alone public company in June 2005. The offer represents a nearly 5 percent premium over the $8.85 closing price of Eddie Bauer shares Friday and a 12 percent premium over the previous four weeks' average closing price.

Wendi Kopsick, a spokeswoman for Eddie Bauer, said the company would not speculate on future moves regarding management. The sale is expected to close in the first quarter of 2007.

Sun Capital is a Boca Raton, Fla.-based firm that has holdings in retailers including Mervyn's LLC and Lillian Vernon Corp. Golden Gate Capital, based in San Francisco, has invested in Catalog Holdings Inc., a direct marketer of women's apparel under brands including Spiegel.

"It's an investment in a brand identity," said Candace Corlett, a principal at consulting firm WSL Strategic Retail in New York.

Founded in Seattle in 1920 by Eddie Bauer, the company said the sale would provide resources to turn itself around.

The retailer incurred losses in the past two quarters after switching its focus from outdoor gear to fashions for its younger customers. In August, the company said it had lost $42 million in the second quarter and a total of $77.6 million for the first six months of this year. Despite the losses, Eddie Bauer recently opened new stores in Georgia, Pennsylvania and California.

Eddie Bauer has suffered from targeting the wrong customer and choosing poor store locations, Corlett said. The new owners will need to better identify its target audience and are likely to expand catalog and online sales, she said.

Shares of Eddie Bauer gained 14 cents, or 1.6 percent, to close at $8.99 Monday in Nasdaq stock market composite trading. The shares closed at $27.50 June 21, 2005, after the company exited bankruptcy. It put itself up for sale in May.

Eddie Bauer may have its credit ratings cut because of the sale, Standard & Poor's Rating Services said. The retailer's debt is non-investment grade.

Closely held investment firms such as Eddie Bauer's future owners use a combination of their own funds and borrowed money to buy companies, with the goal of selling them at a profit. Buyout firms have agreed to buy about 65 U.S. retailers and restaurant companies so far this year, according to Bloomberg Data.

Eddie Bauer has blamed losses on poor consumer response to merchandise changes. It has said its fashions were too skewed to younger customers among its 30-to-54 age group, it moved too far away from its "outdoor heritage" and offered too many colors. The retailer said it also raised prices too aggressively.

Once it left bankruptcy to become a stand-alone company, Eddie Bauer issued 30 million shares to 575 lenders who were owed $1.4 billion in debt by Spiegel. General Mills Inc. bought the company in 1971 and expanded its retail operations to about 60 stores. Spiegel acquired the company in 1988.

As of July 1, Eddie Bauer operated 267 retail stores and 108 outlet stores in the U.S. and Canada. During the quarter ended July 1, about 27 percent of its $225.7 million in sales came from catalog and online purchases.