Federated Extends Purchase Deadline for Fingerhut

The sale of Fingerhut may be close.

Parent company Federated Department Stores Inc., Cincinnati, said that it is providing Business Development Group Acquisitions Inc. additional time to arrange financing for a purchase. Peter Lytle-led Business Development Group, Wayzata, MN, through its investment subsidiary, BDGA, signed a nonbinding letter of intent last month with Federated to buy the catalog giant. According to the Associated Press, the arrangement hinged on BDGA getting financing by the end of last week.

When asked whether the consummation of a sale appeared likely, BDG senior partner Marshall Masko said, “I would think so. Yes.”

Masko mentioned that BDG representatives traveled to Cincinnati to meet with Federated management and that “lengthy and productive discussions” took place.

“We believe it's a financeable transaction, and we are bringing the bankers and investors in so they can do their due diligence,” he said. “The deeper level of due diligence by the financial investors begins Monday. They will take a look at the models we put together, and how much we're putting in, to get an overall comfort level with the investment.

“I think Federated feared that it would have to liquidate the company, but I think they have a high level of confidence in us. Both parties are very committed to making a sale work, and we believe we can consummate a sale with quick timing – very quick timing for a transaction of this size.”

Masko also commented on his firm's due diligence efforts.

“When you do due diligence, you look for problems, [and] a lot of the beliefs we had were confirmed,” he said. “Some of the negatives we found can be manageable.”

He did not specify what the “negatives” were.

“We are doing everything we can to make this deal happen,” said Carol Sanger, Federated's vice president of corporate affairs.

When asked March 8 about the length of the extension, Sanger said, “another week or so.”

In addition to allowing BDG more time to line up sources of financing, Sanger said the extension also would allow “additional time for their due diligence.” But she warned that a deal is not guaranteed.

“I don't think you should read anything into it beyond what we have said,” she said. “It may or may not happen. We are giving them additional time to see if it can happen.”

Former Fingerhut CEO Ted Deikel and Tom Petters are also part of the equation. They also have put forth an offer, and Federated had previously stated that “the sale process remains open.” The Deikel-Petters offer was set to expire March 8.

While Deikel, according to the report, wouldn't say whether his group will renew the offer, he said Federated owes him a response.

“We will push on that a little bit,” Deikel told the St. Cloud (MN) Times. “We're not just going to go to sleep and forget about it.”

According to the Associated Press, Sanger said Federated views the Deikel bid to be a fallback.

“There is no offer there,” she said.

Masko echoed Sanger's comments when he said: “There is only one offer on the table.”

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