Harry & David Bring in Turnaround Pro

TROUBLED FOOD GIFTS MERCHANT HARRY & DAVID HAS BROUGHT IN A TURNAROUND SPECIALIST AS ITS NEW CEO. Kay Hong, a managing director at global turnaround specialist firm Alvarez & Marsal, was appointed chief restructuring officer on Feb. 18, and will also serve as Harry & David's interim CEO.

Steven Heyer, who replaced Bill Williams as Harry & David's CEO last February, will retain his position as chairman of the company.

Hong served as an officer at Spiegel and Movie Gallery and as a financial adviser for Eddie Bauer Holdings, London Fog Group, Lululemon Athletica and the secured lenders of Legacy Estates Group.

Can Harry & David be turned around? The company is facing an estimated $7 million interest payment on March 1 on its senior unsecured notes, and a substantial scheduled debt maturity in 2012 when its $58 million senior unsecured notes mature.

“We believe that Harry & David's current capital structure is unsustainable and that the company will seek to restructure its balance sheet,” Standard & Poor's analyst Mariola Borysiak said in a report. “In our opinion, this could lead to a selective default or a filing for protection under Chapter 11.”