Spiegel Admits to Doubt About Financial Viability

Is time running out for The Spiegel Group? On Feb. 25 the company said in a form 8-K filed with the Securities and Exchange Commission that it doesn’t think it will have enough funds to finance its operations in the future. According to spokesperson Debbie Koopman, the Downers Grove, IL-based Spiegel is “exploring a range of strategic options in conjunction with lenders” to provide for the company’s continued operations. As for how long Spiegel can continue operating, “there is no specific forecast,” she says.

In the new 8-K, the company noted that it won’t meet the minimum performance requirements on two of its asset-backed securities transactions for the current financial period and that it might miss the requirements of another series of asset-backed securities.

Spiegel, which mails the Spiegel, Newport News, and Eddie Bauer catalogs in addition to operating the Eddie Bauer retail chain, issued six asset-backed securities series, three backed by private-label receivables, the rest by bankcard receivables. In the 8-K filing, Spiegel says that if its two bankcard receivables-backed securities fail to meet minimum performance requirements, an automatic payout would take place in early March for the two private-label series insured by MBIA Insurance Corp. as a result of a cross-default process.

In an earlier filing, Spiegel noted that if the company is unable to sell its bankcard business by March 31, the federal government would force it to stop accepting new charges on existing accounts.

For the time being, Spiegel is looking for a financial turnaround advisory firm to help it restructure and improve its financial performance.

Although neither Spiegel’s 8-K nor Koopman will specify just how long the company can operate with its current financial situation, “we’re continuing to operate as usual,” Koopman says. “The key thing is we continue to focus on restructuring our debt arrangements.”