TOY MAKER WINS APPLAUSE COMPANY'S FORMER HEAD BUYS ASSETS, PLANS TO REHIRE 400.

Byline: Gregory J. Wilcox Staff Writer

WOODLAND HILLS - The former head of plush toy maker Applause Inc. on Wednesday bought the debt ridden company out of foreclosure and plans to rehire about 400 employees worldwide who were fired Friday when the operation was closed.

Robert G. Soloman, who first worked at Applause in the early 1980s, led the investment group that paid an undisclosed amount for the company's assets and good will. Solomon will become Applause's chairman and chief executive and plans to keep the company in Woodland Hills.

Solomon built the Woodland Hills-based company with links to Hollywood and Wall Street into a sector powerhouse during the early 1980s.

The rescue caps a frantic round of deal-making for the toy industry veteran, who learned of Applause's financial plight about six weeks ago. The company had more than $100 million in debt and had been under pressure recently from Fleet Capital, its chief bank.

Its 90,000-square-foot building is now up for lease.

``This was like my child,'' Solomon said of the company he first worked at in 1982.

The company appeared dead on Friday after Fleet initiated foreclosure proceedings and terminated all the employees.

A Fleet Capital executive, Leslie Reuter, refused to discuss the situation on Wednesday, saying it was a confidential matter between the bank and a client.

Solomon said he decided to try to save Applause after receiving a call for help in February from then-company President Jonathan Mather. Shortly after that discussion, on a Saturday morning, he met a Fleet Capital representative for coffee to discuss the situation.

``She said, 'I'm going to liquidate this company,' '' Solomon said Wednesday afternoon during an interview at his office in Woodland Hills as money to finance the deal was being wired between bank accounts.

Four days later he signed a letter of intent to acquire the company but ended up buying the assets out of foreclosure.

Applause makes a wide range of plush toys and a big chunk of its revenue comes from licensing agreements with entertainment giants like The Walt Disney Co. and Warner Bros.

Mather, who could not be reached for comment on Wednesday, in late February blamed Applause's troubles on the fact that 2000 was a weak year for movie tie-ins.

Solomon disagreed, saying the company had lost its focus and had been leveraged to the point where it was saddled with too much debt, he said.

``I can't rely on movie studios to keep a company going. I can't rely on ``Howard the Duck'' being a success or ``The Grinch Who Stole Christmas'' being a success,'' Solomon said.

His other two partners in rescuing Applause are an institutional investor and a local family business. Solomon said he is the majority stake holder.

Solomon hopes to have the door open again by this morning and a new management team in place within 24 hours.

``I'm going to get the key back to that building and call the majority of people who were fired last Friday, call the licensors, call the vendors and the landlord,'' he said.

The Daily News first reported in late February that the toy maker, whose stable includes a wide range of ``Star Wars'' and other entertainment- themed characters, was struggling financially.

Applause, a privately held company, had missed its 2000 sales target and on Jan. 2 was notified by Fleet Capital that its credit line was being tightened.

As a result, the company could not pay its vendors.

Applause has undergone several ownership changes over the years.

Solomon, a native of Tonowanda, N.Y., began his career in the plush toy sector in the mid-1970s working for Wallace Berrie, developing the company's East Coast market.

His career thrived and he became a partner in the company, which bought Applause in 1982. Solomon moved to California to oversee the Applause operation.

In the late 1980s the company issued $100 million in high-yield bonds which matured in 1991 and were converted to equity. The owners then included Trefoil Capital Investors LP, an investment group led by Roy E. Disney, vice chairman of Burbank-based The Walt Disney Co., Lawrence Tish's Loews Corp. and Leon Black of Apollo Investment.

Solomon left Applause at the end of 1991 but returned to the plush toy business a year later, becoming chairman, president and chief executive officer of Dakin Inc., an Applause competitor also based in Woodland Hills.

In 1995 Solomon approached Applause officials about a merger and that company agreed to buy Dakin. He then formed his own marketing company.

Solomon believes he can return Applause to its former position as one of the sector leaders.

``I'm confident that the licensors, like Disney and Warner Bros., along with the vendors and the ex-employees will have the faith in the heritage of the company and my personal commitment and business plan to join me.''

CAPTION(S):

2 photos

Photo:

(1 -- color) Robert G. Soloman has bought the assets of Valley-based toy maker Applause, a move that will save hundreds of jobs.

(2 -- color) This sign on the Applause building on Variel Avenue in Woodland Hills is a reminder of once-uncertain times.

Andy Holzman/Staff Photographer