50-OFF Stores, Inc. announces lawsuit against placement agent of Regulation S offering.

SAN ANTONIO, Texas--(BUSINESS WIRE)--Jan. 10, 1996--San Antonio off-price retailer 50-OFF Stores, Inc. reported the recent filing of a lawsuit (50-OFF Stores, Inc. v. Jefferies & Co., Inc. and Jefferies International Limited, Cause No. 9-CI-00349) in state district court in Bexar County, Texas against Jefferies & Co., Inc. and Jefferies International Limited (collectively "Jefferies") which acted as the company's placement agent in a Regulation S offering of its Common Stock late in the company's fiscal year ended Feb. 3, 1995.

As previously reported by the company, certain defendants in a related federal court proceeding (50-OFF Stores, Inc. v. Banque Paribas (Suisse) S.A., Betafid, S.A., Yanni Koutsoubos, Andalucian Villas (Forty Eight) Limited, Arnass Limited, Brocimast Enterprises Ltd., Dennis Morris, Howard White, and Morris & Associates, Cause No. SA-95-CA-0159 in United States District Court in San Antonio) misappropriated 1.5 million shares of the company's Common Stock in the Regulation S offering, breached purchase agreements for such stock, and engaged in fraud and securities fraud with respect to the transactions.

In the recently filed state court action against Jefferies, the company alleges that, despite Jefferies' obligations as sole placement agent to locate qualified purchasers in the offering, the principal contacts with Jefferies on the purchasers' side were two individuals claiming affiliation with Banque Paribas (Suisse) S.A., one of whom turned out to be a person who had in recent years been extradited from the United States and delivered to Canadian authorities on fraud charges and whom the Toronto Star had labeled as "one of Canada's most wanted business fugitives" at the time he surrendered to the authorities; that person was ultimately convicted of fraudulently obtaining millions of dollars in tax credits from the Canadian government. The other such person has in recent years had a United States federal court enter a permanent injunction against violation of the securities laws and a $2,750,000 million monetary judgment (upon which he defaulted, while apparently fleeing the United States) against him and his affiliated entities in connection with a civil lawsuit filed by the Securities and Exchange Commission for violations of Regulation S. The latter person also had one or more civil lawsuits filed by other companies against him, which had been publicly reported and investigated by the SEC.

The company alleges that the unsuitability of such persons ought to have been discovered by Jefferies as placement agent, and that its failure to do so gave rise to substantial damages suffered by the company and constituted a breach of the placement agreement, a breach of fiduciary duty and negligence for which Jefferies is liable to the company. The company is seeking actual and punitive damages in connection with the litigation.

The company also announced that it is continuing to vigorously prosecute the related federal court proceeding and is engaged in preliminary discussions with certain of the defendants in that proceeding, although there can be no assurance that any settlement can be reached on terms that would be acceptable to the company. The company intends to vigorously prosecute both such matters and to pursue all available avenues to obtain all appropriate remedies, including either the agreed upon proceeds for the shares, or the shares themselves, as well as the company's actual and punitive damages.

CONTACT: 50-OFF Stores, Inc.

Charles M. Siegel, 210/805-9300