Investment group kicks in $100 million to keep sneaker-making L.A. Gear on its feet.Investment group kicks in $100 million to keep sneaker-making L.A. Gear on its feet The management of sneaker-maker L.A. Gear last week agreed to give up 30 percent of the company and much control in exchange for $100 million in cash from an investor group run by Roy E. Disney Roy Edward Disney, KCSG, (born January 10, 1930) was a longtime senior executive for The Walt Disney Company, which his father Roy Oliver Disney and his uncle Walt founded. , family heir of the Walt Disney empire. L.A. Gear, which has been liquidating inventories of its South Korean-made sneakers sneakers Noun, pl US, Canad, Austral & NZ canvas shoes with rubber soles sneakers npl (US) → zapatos mpl de lona; zapatillas fpl , traded in the $11- to $13-a-share range last week, off from its 52-week high of more than $50 a share. The Marina del Rey-based company, the nation's third-largest sneaker seller, has been troubled by weak sales following huge expenditures on advertising and celebrity spokespeople, such as singer-dancer Michael Jackson, former basketball star Kareem Abdul-Jabbar and football quarterback Joe Montana. Recently, L.A. Gear sneakers have proliferated in off-price outlets and in discount-shopping venues, such as Santee Alley in downtown Los Angeles Downtown Los Angeles is the central business district of Los Angeles, California, located close to the geographic center of the metropolitan area. The sprawling, multi-centered megacity is such that its downtown core is often considered just another district like Hollywood or . The company lost $12.5 million on revenues of $170.9 million in its latest reported quarter ended Feb. 28, compared with a profit of $13.9 million on revenues of $187.3 million in the year-earlier period. Orders are down, too. Disney's group is the Burbank-based Trefoil trefoil (trē`foil) [O.Fr.,=three-leaf], in botany, name for several plants, chiefly of the pulse family, having trifoliate leaves. Best known of the trefoils is clover. Capital Investors L.P., an investment vehicle set up to take stakes in troubled enterprises. The group also will take three seats on L.A. Gear's expanded nine-member board, and approval rights on L.A. Gear's annual operating plan. If Trefoil goes through with its plan, it will buy $100 million worth of preferred convertible stock, which can be exchanged for 8.4 million shares of L.A. Gear common stock at $11.94 each. Thus if L.A. Gear common stock appreciates, Trefoil can score a profit by converting and selling its stock -- although its large, 30 percent holding is somewhat dilutive, and may be hard to sell all at once. Until conversion, L.A. Gear will pay 7.5 percent annual dividends on the Trefoil convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". . In an interesting twist, both Trefoil's and L.A. Gear's public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most firm is the Westside-based Sitrick & Co., run by Michael Sitrick, former top public relations officer public relations officer n → encargado/a de relaciones públicas public relations officer n → responsable m/f des relations publiques at the conglomerate Wickes Cos. under Sandy Sigoloff's reign there in the 1980s. But last week Sitrick denied he connected Trefoil and L.A. Gear. "No, I didn't bring them together," Sitrick said. "They found each other." |
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