Union fight helps doom After Six sale

September 04, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Union opposition has helped scuttle the sale of After Six, the country's largest tuxedo maker, to a group of investors who wanted to move the operation and hundreds of jobs from Philadelphia to Harford County.

"The union opposition was a major thing that made things go sideways for too long," said Charles S. Ezrine, a former Baltimore tire merchant who led the investor group, called CSE Acquisitions Corp. The group had proposed buying the financially struggling formal wear company and moving it to the recently closed Gleneagles rainwear plant in Bel Air.

The move was aggressively opposed by the Amalgamated Clothing and Textile Workers Union, which represents about 280 of the 360 workers at the Philadelphia plant.

Mr. Ezrine said his group withdrew its offer to buy the company on Aug. 24 when "external and internal consents" were not forthcoming. In particular, the company's pension fund, which is partly controlled by the union, did not consent to the arrangement. "That was one of the reasons for it dying," he said.

Because formal wear manufacturers must line up sales several months before the critical spring selling season, the investment group had been eager to conclude the deal as soon as possible, Mr. Ezrine said.

While there is a small possibility of reviving the sale, he said it would not be the same deal as before. Earlier terms were not disclosed.

But he said the effort left the investors with "an appetite for formal wear," and they are "rapidly evaluating all of our options."

The failure of the deal was also a blow to Harford County efforts to replace the jobs lost when the Gleneagles plant was closed by Chicago-based Hartmarx Inc. in June. "It's disappointing that it did fall through," said James E. Fielder, director of economic development.

John Fox, manager of the Philadelphia Joint Board of the Amalgamated Clothing and Textile Workers Union, said he was "very, very pleased and happy" the deal fell through. "We made history," he said.

He predicted After Six "will be able to sell more tuxedos than before because they are talking about saving jobs." The company has not asked workers for concessions, he said.

The union had argued that the sale and prospective move to Maryland violated its contract with the company. "We can go back to living in the trees if we can't abide by a contract," Mr. Fox said. "There are things in the contract the union doesn't like, but we abide by them."

In early August, the union asked a U.S. District Court in Philadelphia to issue an injunction blocking the sale until an arbitrator could decide if it would violate the contract. Philadelphia Mayor Edward Rendell and Republican U.S. Sen. Arlen Specter testified on the union's behalf.

But U.S. District Judge J. Curtis Joyner ruled in favor of Mr. Ezrine's group, saying the risk to the company -- which said it was on the brink of bankruptcy -- outweighed the potential harm to the union and the Philadelphia area.

In a letter Monday to its customers and suppliers, After Six said it would continue to operate in Philadelphia. The company also said it had reached an agreement in principle with investors, who hold about $40 million in bonds, to exchange that debt for stock.

"This equitization will allow the company to continue to operate in Philadelphia with approximately $20 million of shareholders' equity and very little debt," said the letter, signed by Victor E. Ameye Jr., After Six's chairman and chief executive.

Mr. Ameye did not return phone calls yesterday.

However, After Six has another problem, because its license to make Christian Dior products expired on Sept. 1. The Christian Dior label accounted for about 30 percent of the company's output, Mr. Ezrine said.

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