Timothy F. Finley, chief executive officer of Jos. A. Bank Clothiers Inc., has persuaded its bondholders to switch to equity ownership in a move that has saved the Baltimore-based retailer from bankruptcy.
Struggling under $70 million in debt as a result of a 1986 leveraged buyout, the company was close to filing for Chapter 11 reorganization, Finley said. However, during a press conference yesterday to announce a new advertising campaign, Finley said that bondholders had agreed in principal to swap their bonds for preferred and common stock.
"We have restructured," Finley said.
With the debt-for-equity swap, the company will be servicing about $25 to $30 million in debt, which Finley said is manageable.
Bank, headquartered in Owings Mills, was founded in Baltimore but was sold to the Quaker Oats Co. in 1981. Quaker sold the company in 1987 for about $105 million to a group of investors, who financed the majority of the deal with junk bonds and loans, with the help of Drexel Burnham Lambert.
Last August, Finley, an expert in reorganizing companies, was brought in to save Bank from bankruptcy. But to do so, he said a great deal of the company's debt had to be quickly retired.
"There was a lot of hard work to get to this point but I think it was a fair deal for everyone," said David Preiser, a New Jersey-based consultant who represented a committee of bondholders.
In announcing the multimillion television and radio ad campaign, Bank officials said they hope it will elevate the retailer to national status. Despite more than 1,452 employees, 40 stores in 29 states and a catalog division, Bank still suffers from a low profile, Finley said.
The advertising campaign begins today with 30-second spots featuring the dry humor of Steve Landesberg, best known for his role as Sgt. Dietrich on the television comedy show "Barney Miller." He also appears in Ryder truck rental commericals.