Minnesota Official Concerned Fingerhut Deal Will Fail

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Minnesota Attorney General Mike Hatch is raising concerns about whether a deal to buy Fingerhut from parent company Federated Department Stores, Cincinnati, can be completed, the Associated Press reported yesterday.


Hatch is worried that the catalog giant will be shut down and liquidated if Business Development Group, Wayzata, MN, which is led by Peter Lytle, cannot reach an agreement soon to buy the company.


"Peter Lytle still says he's optimistic he can put together a deal," Fingerhut spokesman Ben Saukko said.


Business Development Group, through its investment subsidiary, Business Development Group Acquisitions Inc., signed a non-binding letter of intent with Federated to buy the catalog marketer almost two months ago.


"We continue to work with BDGA, but there is nothing to report at this time," according to a statement issued by Carol Sanger, Federated's vice president of corporate affairs.


While Federated had nothing to say, The Deal.com reported that J.P. Morgan Partners, the private equity arm of J.P. Morgan Chase & Co., is in discussions to purchase two Fingerhut subsidiaries "for a price likely between $150 million and $250 million."


A source told The Deal that J.P. Morgan Partners had secured a $150 million asset-based loan from Banc of America Securities LLC, Foothill Capital Corp. and CIT Group Inc. to finance a buyout for Fingerhut's Arizona Mail Order and Figi's.


Sources were cited as saying that a meeting took place on March 19 in Fingerhut's offices that included Federated, BDG and J.P. Morgan to discuss a deal for all of Fingerhut. Federated said later that it had not concluded a deal to sell Fingerhut as a going concern and would consider asset sales involving other parties.


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