Intimates merger.

The parent company of Frederick's of Hollywood, FOH Holdings Inc., completed a complicated reverse merger with a New York-based women's intimate apparel line called Movie Star Inc. that included a one-for-two reverse stock split and a $20 million rights offering.

The new company, Frederick's of Hollywood Group Inc., started trading under the symbol FOH on the American Stock Exchange at the end of January.

Frederick's Chief Executive Linda LoRe and Melvyn Knigin, chief executive of Movie Star--which sells women's robes and undergarments to Wal-Mart Stores Inc., Federated Department Stares Inc., and other retailers--will continue to lead their respective companies independently. Thomas Rende of Movie Star has become CFO of the combined company.

The new company, which is estimated to generate about $200 million in sales, announced plans to use the $20 million offering for expansion. Frederick's has about 136 stores, mostly in malls, and is targeting 191 mall markets that it would like to go into as its first course of business.

It will also open a Frederick's of Hollywood Asian office to move products to market quickly and expand its selection.

"Now that we've been able to hunker down, the future is the brightest it's been for the last 20 years," LoRe said. Frederick's declared bankruptcy in 2001 but emerged two years later after cutting costs and increasing Internet sales. The company was founded by Frederick Mellinger in 1946 and is credited with creating the modem sexy lingerie industry, including padded and push-up bras.

The company will first target markets where they have a strong presence.

In recent years the company has toned down the sexiness of its apparel to broaden appeal.

On its first day of trading FOH closed at $4.10. Shares hovered around $3.60 for most of the first week.