Hanover Moves to Reduce Debt

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Hanover Direct Inc. begins a recapitalization this month to lower its preferred debt and will consider the sale of non-core assets to reduce its debt even further, the company said Nov. 10.

The recapitalization will reduce Hanover's outstanding preferred debt by half to $56 million, senior vice president Charles E. Blue said.

"As part of the agreement, we will try to sell non-core assets in order to retire the new preferred issue of $56 million," he said. "We are looking at marketing businesses that don't fit within our home core strategy. That includes Gump's, International Male and Silhouettes."

Blue gave no details regarding potential suitors or a time frame for a sale.

The Edgewater, NJ, multichannel marketer also said Nov. 10 that it settled litigation with Chelsey Direct LLC "regarding the ownership of preferred shares," Blue said.

As a result of the settlement, the company will reconstitute its board to include eight members, including four designees of Chelsey Direct. It later will expand to nine members with the additional director being a Chelsey Direct designee.

Also reported Nov. 10 were total net revenues for the 13 and 39 weeks ended Sept. 27 of $96.6 million and $304.9 million, respectively, a drop of $9.4 million and $24.5 million, respectively, from the prior year. Income from operations for the 39 weeks ended Sept. 27 reached $1.5 million, a $1.9 million improvement over a reported loss from operations of $400,000 in the comparable period in 2002.


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