Cash Shortage Threatens Spiegel Operations

Share this article:
Debt problems mean that Spiegel might no longer be able to fund its operations, according to financial papers filed by the retailer Feb. 25.


Spiegel said it would be unable to meet financial requirements set by the insurer of its credit-card securities. As a result, the company expects to be forced to divert millions of dollars in cash to its securities holders, leaving little with which to carry out its operations "in the near future and thereafter," Spiegel said in its filings.


Spiegel, which includes Eddie Bauer, Spiegel Catalog and Newport News, said it is developing a plan to restructure its debt to try to continue operations. The company planned to obtain restructuring advisers to assist in this effort.


KPMG LLP, Spiegel's auditor, issued a letter this month raising the possibility that Spiegel's debt problems might leave it unable to maintain its existence. Spiegel's debt problems started two years ago when it began issuing credit to the sub-prime market, which consists of consumers with poor credit histories who pay high interest rates.


Other dismal developments for Spiegel in recent weeks include declining sales, a Securities and Exchange Commission investigation into late filings of its financial reports and the departure of chief financial officer James R. Cannataro to Nintendo's U.S. unit earlier this month.


Share this article:
You must be a registered member of Direct Marketing News to post a comment.
close

Next Article in Multichannel Marketing

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs:

More in Multichannel Marketing

Pet World's Multichannel Marketing Is a Whole Other Animal

Pet World's Multichannel Marketing Is a Whole Other ...

The family owned pet store redesigns its website to bring the in-store experience online.

Complexity's What Marketers Got, Simplicity's What They Want

Complexity's What Marketers Got, Simplicity's What They Want

Customer insights managers want campaign management tools to remain easy to use, even as they up their games with multi-layered campaigns.

Wine.com Uncorks New Digital Marketing Opportunities

Wine.com Uncorks New Digital Marketing Opportunities

The online wine retailer's strategy incorporates different flavors and depths.