Spiegel Update: New Owner, Old Management

Earlier this summer it certainly appeared that Hinsdale, IL-based holding company Pangea Holdings would be the winner of the Newport News apparel catalog and the Spiegel Catalog. But the deals were scotched when two new entities, Newport News Holding Corp. and Spiegel Catalog Holdings Corp. — both formed by Spiegel senior management and San Francisco-based private equity firm Golden Gate Capital — snapped up the properties from Downers Grove, IL-based Spiegel Group.

Details are sketchy, but here are the basics: Pangea on May 11 had offered $28.6 million for Newport News in a “stalking horse” bid, as the lead bidder in the auction process. Although other companies had the opportunity to top the stalking-horse bid, none appeared to have done so — until Newport News Holdings Corp. announced on June 24 that it had acquired the women’s apparel catalog.

As for Spiegel Catalog, Pangea had placed another stalking-horse bid for the general merchandiser on May 24. It offered $53.4 million in the form of $22.0 million in inventory commitments, $29.4 million in assumed liabilities, and $2 million in cash. Because the bankruptcy court received no qualified overbid by June 15, it approved the Pangea bid. But then Spiegel Catalog Holdings Corp. announced on July 19 that it had acquired Spiegel Catalog.

Neither side is publicly discussing the turn of events that transpired from the bankruptcy auctions to the announcements of the sales. While Pangea as a holding company is no longer involved, the three principals of Pangea Holdings are shareholders in both companies and will act as investors and consultants to management of Newport News Holdings Corp. and Spiegel Catalog Holdings Corp. In fact, Pangea principal Christian Feuer — a former Spiegel vice president of marketing, advertising, and production — is interim chief operating officer of the two concerns. Geralynn Madonna is the president/CEO of both Spiegel Catalog Holdings Corp. and Newport News Holdings Corp., roles she had held under Spiegel Group.

WINDING DOWN OPERATIONS

As Spiegel waves goodbye to Newport News and Spiegel Catalog, it’s adjusting operations accordingly. On July 22 the company announced it was closing its Hampton, VA, call center, which employs 550 workers. Spiegel spokesperson Debbie Koopman explains that “as we align our organization based on the sales of Spiegel Catalog and Newport News, this facility is no longer needed to serve the business.” Spiegel expects to close the center by the end of the year.

As of late July, $1.3 billion apparel cataloger/retailer Eddie Bauer was Spiegel Group’s sole remaining property. Koopman says that Bauer wasn’t formally put on the block until April of this year, so it’s not surprising that it hasn’t been sold yet. From the day that the company filed for bankruptcy in March 2003, there was speculation about who would buy Bauer, Koopman notes, “but the company was never officially up for sale until we made the announcement in April.”

In other Spiegel news, the company had its stock revoked by the Securities and Exchange Commission (SEC) as part of an ongoing investigation. Its shares can no longer be traded or sold through a broker or dealer on any exchange. As a result of the SEC announcement, Spiegel will no longer make its quarterly or annual reports public.