In what must be the sale of the century, Laura Ashley is selling its North American division to a management-led group for $1.
The fire sale was forced by Laura Ashley’s bankers, who refused to extend the troubled retailer’s credit line, unless it agreed to close or sell its North American operations, and raise nearly $40 million by selling new stock.
The buyout team is led by Malayan United Industries, which bought a 40 percent stake in Laura Ashley last year.
There was no fear of a bidding war, because management’s $1 dollar offer was the only one. Laura Ashley will write off $34 million in debts from the U.S. operations as a result.
North America has been the bleakest chapter in Laura Ashley’s long-running saga of trouble, losing $11 million in fiscal 1999.
Management has closed 26 U.S. and Canadian stores in the last year, leaving 106 in the region.
But the entire operation has suffered from what can only be described as a backlash against its flowery dresses and home furnishings.
Laura Ashley has been desperately trying to remake itself over the last few years. The company also blew through 3 CEO’s in 14 months.
It even put evangelist Pat Robertson on its board several months ago, but none of the turnaround efforts have worked so far.
Laura Ashley also reported 1998 fiscal year results yesterday, narrowing its loss from the year before.
Thinly-traded Laura Ashley ADR’s, which last traded on April 21, are now at 11/4.