Group drops interest in Merry-Go-Round

January 31, 1995|By Jay Hancock | Jay Hancock,Sun Staff Writer

An investment group led by retail executive Dennis Bookshester is no longer interested in buying Merry-Go-Round Enterprises Inc. and bringing it out of bankruptcy, an attorney representing the group said yesterday.

"We're out. We're not going to submit a proposal," said Ben Waisbren, a Chicago attorney working for Mr. Bookshester's group, MGR Partners.

News of Mr. Bookshester's interest helped spark a 45 percent jump in the price of Merry-Go-Round's common stock on Jan. 5, to $2. Investors were betting that MGR Partners would make a solid offer for the Joppa-based retailer or even spark a bidding war.

MGR Partners' withdrawal -- and the apparent absence of other serious suitors -- leaves clearer sailing for a reorganization plan proffered one month ago by Merry-Go-Round's creditors and shareholders.

That plan would give 25 percent of the fashion boutique chain to present shareholders and 75 percent to unsecured creditors, who also would receive debt securities and cash. Merry-Go-Round, which continues to be unprofitable, has said it could emerge from Chapter 11 bankruptcy proceedings under the deal as early as June.

MGR Partners never made a formal offer for Merry-Go-Round. Mr. Waisbren said his group backed off because it could not obtain the "genuine cooperation" of the retailer's management and directors. "We never had any interest in a hostile deal."

Merry-Go-Round had tentatively retained the Blackstone Group, a New York investment bank, to work with MGR Partners. Now that the potential deal has evaporated, Blackstone won't be needed, said Thomas Shull, Merry-Go-Round's chairman.

Mr. Bookshester is former chief executive of jeweler Zale Corp. and former vice chairman of department store chain Carson Pirie Scott & Co. He and other players at MGR Partners met with Merry-Go-Round representatives Jan. 12 but didn't gain the access they had requested to the retailer's books.

MGR Partners faced opposition from Merry-Go-Round's equity and creditors committees, both of which fear that unsolicited offers could delay their proposed reorganization plan even if the offers don't pan out.

Merry-Go-Round, for its part, held that MGR Partners had not demonstrated the financial strength to be taken seriously.

Mr. Waisbren disputed that evaluation. MGR Partners would have had to raise additional capital, he said, but "within the group there was the financial wherewithal to contribute a substantial portion of the total equity infusion which we believe is necessary."

MGR Partners included Wing/Tai Holdings Ltd., a large Hong Kong-based apparel manufacturer, Mr. Waisbren said. The partnership's plan was to sell Wing/Tai clothing in Merry-Go-Round's 1,000 Chess King, Dejaiz, Cignal and Merry-Go-Round stores.

In recent weeks, the price of Merry-Go-Round stock has drifted lower. Yesterday its shares closed unchanged, at $1.50. There was no public announcement about MGR Partners' withdrawal.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.