Posted on: Friday, October 26, 2001
Hawai'i-based firm to buy Crazy Shirts
By Andrew Gomes
Advertiser Staff Writer
In an unusual courtroom auction punctuated by frequent time-outs to consider offers and counteroffers, a Hawai'i-based retailer made the surprise winning bid for Crazy Shirts at a bankruptcy hearing yesterday.
An acquisition company headed by Ron Robertson, chairman of Waikiki Trader Corp., agreed to buy nearly all of Crazy Shirts' assets for roughly between $7 million and $10 million — a bid accepted by Crazy Shirts' major creditors and Bankruptcy Judge Lloyd King.
Bidding went back and forth mostly between the Waikiki Trader group and California-based apparel company Big Dog Holdings Inc., which several days ago withdrew a $10 million offer made as part of Crazy Shirts' Chapter 11 bankruptcy filing Sept. 10. Big Dog said it pulled its earlier offer because of the downturn in business since the Sept. 11 terrorist attacks.
Robertson, who operates a variety of retail concepts in Hawai'i and on the Mainland, plans to operate Crazy Shirts as it is, although two or three of Crazy Shirts' 41 stores will probably be closed, he said.
The company would like to retain as many of Crazy Shirts' roughly 500 employees as possible, added Mark Hollander, a Waikiki Trader manager who will become president of Crazy Shirts.
Many employees and creditors of Crazy Shirts, a 40-year-old 'Aiea-based apparel manufacturer and retailer, packed the courtroom to witness the auction. Prospective purchasers who did not bid also attended.
A third bidder, an investment partnership between former Crazy Shirts director Kenton Eldridge and jewelry retailer Robert Wu, made only an initial offer of about $7 million.
By the end of the four-hour hearing during which there were eight complicated bids involving mixtures of cash and additional consideration, the best offer from the two finalists came down to a difference between $150,000 cash and the inventory of nine stores valued at substantially more than $150,000.
"They wanted the cash," said Andrew Feshbach, chief executive officer of Big Dog, which offered the inventory for liquidation to creditors. He said he was disappointed by the outcome, but said the offers were fully priced.
The Waikiki Trader group offer consisted of $6.75 million in cash and other considerations that could add $3.5 million, depending on the sales performance of the stores and a real estate transaction.
Crazy Shirts has estimated assets of not more than $8.2 million. Debts total about $23 million.
Randy Yeager, Crazy Shirts president and chief executive officer, said both final offers were good.
The auction was conducted yesterday in court because Crazy Shirts estimates it will run up a cash deficit of $300,000 to $800,000 in the next two weeks and could be forced to shut down.
"This is a crisis situation because of the debtor's weakening financial condition," King said.
A Nov. 1 hearing is set to hear objections from landlords who want assurances that the Waikiki Trader group can complete its purchase, and Crazy Shirts artists who contend they still own designs for which the new owner would need to pay royalties.
The purchaser has submitted a $500,000 nonrefundable deposit to the court. Waikiki Trader operates Endangered Species, Le Sportsac Boutique, Christopher James and several general tourist stores and owns 80 percent of Sgt. Leisure. The company had estimated annual sales of $65 million last year.
Crazy Shirts revenues were about $50 million last year. The company ran into financial difficulties in the '90s, but could not recover despite aggressive restructuring.
