Reality intrudes on bagel shop show


May 05, 1994|By Ross Hetrick and Jay Hancock | Ross Hetrick and Jay Hancock,Sun Staff Writers

Why can't real life be more like old movies?

In those old flicks, Mickey Rooney and Judy Garland could organize a Broadway-quality show in a week and raise enough money to save the orphanage. But anybody with an ounce of sense knows that a real-world Mickey and Judy would have to hassle with a million details, delaying the production for months.

In the same spirit, Allan D. Gallant wanted to invite customers of his bagel shops to become part of his show -- as shareholders. He sent out pink postcards, complete with his trademark of a chef's head popping through a bagel, to 1,500 patrons, asking if they would be interested in investing in Bagels Inc., the owner of Sam's Bagels shops in Roland Park and Federal Hill.

Offering $10,000 blocks of stock, the company hoped to raise about $300,000 to expand its two-store operation to five this year and to 50 within five years.

"As a neighborhood store, we would like some of our neighbors as shareholders," Mr. Gallant said in April.

But then reality intruded.

Mr. Gallant's postcards attracted the attention of Maryland securities regulators, who determined that the private stock placement falls under state registration requirements. Mr. Gallant, chairman and chief executive of Bagels Inc., confirms that the company is in the process of registering, but he won't comment on it further.

Likewise, Melanie Senter Lubin, deputy securities commissioner in the state attorney general's office, will not comment specifically on Bagels Inc.

While there are a myriad of regulations on when securities must be registered, in general, offerings of more than $100,000 or those that are publicized widely may fall into that category, Ms. Lubin said.

So it appears that the company's show will go on, but with a little additional behind-the-scenes work. Let's hope the orphanage can still be saved.

Clothier sells stock

Hampstead-based Jos. A. Bank Clothiers Inc. sold stock to the public this week, but it's hard to get finance pros to evaluate it.

Several analysts familiar with Bank work for investment houses that are helping float the shares. As quasi-insiders, they don't want to risk ticking off regulators by talking publicly about the stock when it's in registration.

But one independent analyst likes Bank, especially after the stock fetched less than expected.

The company, which sells suits and shirts, stands to benefit from store growth and a better job market, said Charles Ronson, who publishes the IPO Value Monitor, a New York investment newsletter. Laid-off professionals are getting rehired, he said, and they need suits.

Bank's stock closed yesterday at $10. At that price, it's selling at 11.4 times Mr. Ronson's estimated earnings for this year and is far cheaper than most other apparel sellers and stocks generally.

Management expected to get between $13 and $15 but settled for less when interest in new offerings cooled. "The company really wanted to do the deal," Mr. Ronson said in an interview. "They gave it away."

The suit-buying spurt may not last, he warned. Even so, he added, Bank "is rather attractive at this price."

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