CYGNE DESIGNS, INC. ANNOUNCES SALE OF GJM ASSETS TO WARNACO.(Nasdaq:CYDS CYDS Centre for Youth Drug Studies (Australia) ) today announced the sale of substantially all of the assets of its GJM GJM Golden Jubilee Medal GJM Gay Japanese Male intimate apparel and sleepwear business to Warnaco Inc. In the transaction, Warnaco paid Cygne $12.5 million in cash and assumed certain liabilities of the GJM business. Warnaco is also holding an additional $1.5 million in a treasury security to secure its obligations to make post-closing payments based upon a formula that provides, to the extent that net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. (as defined in the purchase agreement) acquired by Warnaco exceed $8.1 million, Warnaco will pay Cygne the $1.5 million held in a treasury security and the amount by which the net assets exceeds $8.1 million. To the extent such net assets are less than $8.1 million, Cygne will pay Warnaco the difference first by applying up to $1.5 million being held in a treasury security by Warnaco against the amount the net assets fall below $8.1 million and thereafter will pay Warnaco any further difference below $6.6 million in net assets. As a result of the sale, the Company will incur a loss of approximately $33 million primarily resulting from the write-off of goodwill associated with the acquisition of GJM in October 1994. This amount may be increased or decreased depending on the final value of the net assets acquired by Warnaco. The Company will use all the proceeds of the sale to repay outstanding senior bank indebtedness, although it remains in default with the financial covenants of its senior bank loan and its trade credit facility remains suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. . Bernard Manuel, Chairman and Chief Executive Officer of Cygne, stated that the sale of GJM is part of the Company's previously disclosed intentions to restructure and downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. its operations to reduce the liquidity pressures it has been facing. The Company is exploring further restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). options, which may result in additional write-offs. Cygne Designs, Inc. is a leading private label designer, merchandiser and manufacturer of women's apparel. The Company's products include a broad range of woven and knit career and casual clothing. CONTACT: Cygne Designs Inc., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Roy E. Green Chief Financial Officer 212/354-6474 or Morgen-Walke Associates Inc., New York IR contact: David Walke, Howard Zar Press: Leslie Feldman, Michael McMullan 212/850-5600 |
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