THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: THURSDAY, June 16, 1994 TAG: 9406160486
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By MYLENE MANGALINDAN, STAFF WRITER
DATELINE: 940616 LENGTH: Medium
The company has reorganized its debts, closing a painful period plaguing the Richmond-based retailer's 38-year history. Since 1991, when it sought protection from creditors by filing for Chapter 11 protection in U.S. Bankruptcy Court, Best suffered millions in losses, hundreds of layoffs and dozens of store closings.
{REST} Now, freed from most of its long-term debt, incurred after a $1.1 billion leveraged buyout in 1988, Best sees itself poised for growth.
``The reorganization period was challenging, but it afforded Best Products the opportunity to re-invent the catalog showroom and create a strong, aggressive company focused on the needs of its customers,'' Chairman and CEO Stewart M. Kasen said.
``This is the day Best has been waiting for a long time,'' said Kenneth M. Gassman Jr., a retailing analyst with Davenport & Company of Virginia Inc., the Richmond-based brokerage. ``With Best out of its Chapter 11 case, it can now devote its full energies to being a retailer again.''
Best's path, however, will not be smooth.
Resolution Trust Corp. - one of Best's subordinated, or secondary, creditors - wants to block the company's reorganization. RTC filed an appeal in bankruptcy court of the Southern District of New York based on its belief that Best's financial projections are inaccurate and that the court cannot enforce the agreement between Best and some of its other creditors, RTC spokeswoman Anne Freeman said.
RTC is still considering filing an injunction to prevent Best from transferring stock to its creditors, Freeman said.
Best officials, on the other hand, have shown little concern for campaigns by the RTC and other subordinated creditors to scuttle its reorganization.
``We think their claims are without merit,'' Best spokesman Ross Richardson said.
A federal bankruptcy court judge approved the catalog retailer's reorganization plan May 31. Under it, Best will distribute $63 million in cash and 31.6 million shares of new common stock. Creditors will receive cash, stock, a combination of both or nothing, depending upon their claim against the company.
During the period under court protection, Best opened seven new stores, including two in Hampton Roads, and redesigned existing showroom space to create a more friendly shopping environment.
Five Best catalog showrooms and two jewelry stores operate in Hampton Roads. About 60 employees work in each store.
Company officials have filed a request with the Securities and Exchange Commission to register its stock and has asked the National Association of Securities Dealers to trade its stock on the NASDAQ National Market System.
Several interested potential investors, both individuals and institutions, have called Best to ask about an initial public offering of common stock. Because the newly issued common stock is part of a bankruptcy settlement, a stock offering will not be made, Richardson said.
The catalog showroom retailer plans to open 10 new stores this year and 10 more each successive year, Richardson said. It now operates 157 Best showrooms and 12 Best jewelry stores in 22 states and a nationwide mail-order service.
Before bankruptcy, Best employed 17,000 employees and operated 195 showrooms and 35 jewelry stores in 27 states.
by CNB