Fingerhut Employees Expected to Get Pink Slips on FridayMore than 3,300 Fingerhut employees are expected to be laid off Friday as time runs out on Business Development Group Acquisitions Inc.'s bid to acquire the catalog.
However, an effort by former Fingerhut CEO Ted Deikel and Tom Petters is reportedly still in play.
"Federated's investment banker contacted [Deikel and Petters] last week, and we expect to know more this week," Mary Pernula, a spokeswoman for Petters, said yesterday.
Petters is the founder and chairman of Petters Companies and Redtag Inc., both of Eden Prairie, MN.
Federated Department Stores Inc., Cincinnati, said last week that it will "begin to explore potential transactions with third parties interested in purchasing individual Fingerhut assets -- as well as catalog subsidiaries Arizona Mail Order, Figi's and Popular Club, which are expected to be sold as going concerns."
BDGA, Wayzata, MN, signed a non-binding letter of intent to acquire Fingerhut, Minnetonka, MN. The Associated Press reported last week that BDGA managing partner Peter Lytle said his company "was focused on Fingerhut's main businesses" and that he had 95 percent of the financing.
"We have provided BDGA five weeks to complete due diligence, secure committed financing and execute an agreement on terms acceptable to Federated. Despite good-faith efforts by both sides to accomplish this, committed financing has yet to be secured and a transaction has yet to be finalized," Federated vice chairman Ronald W. Tysoe said in a statement. "While we are still hopeful of completing a transaction with BDGA, it is now time to additionally explore negotiating the sale of individual components of Fingerhut."
Tysoe also said no other parties interested in buying Fingerhut as a going concern have emerged since January when Federated announced it would close the catalog if a buyer could not be found.
Fingerhut spokesman Ben Saukko said Federated thinks that delaying any longer would devalue the assets.
"For me personally, it's disappointing, but not surprising," Saukko said. "Federated said all along that it would be unlikely to find a buyer."
Though a deal still could take place, Saukko said, the company is "moving forward with the liquidation of merchandise and termination of some employees."
About 3,700 60-day layoff notices were sent out in January. Saukko said Federated announced that 3,300 of those employees will receive separation packages with termination dates by April 5, and 2,400 of those employees are in Minnesota.
"We're going to move forward with the separation packages, and we expect additional layoff notices will go out in a few weeks," he said. "We will start moving forward with the closing of the business."
BDGA still considers itself in the running and hopes to "shortly provide Federated with sufficient financial comfort to enter into a definitive agreement." Lytle "remains optimistic" that a deal can take place.
"The cost would be in the tens of millions of dollars for Federated to keep them all on," Lytle told the AP last week. "Even if we are successful, we would not keep all of that population on."