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HANOVER EYED IN POTENTIAL TAKEOVER BY MAJORITY SHAREHOLDER.

WEEHAWKEN, N.J.-Hanover Direct, a catalog and Web-based retailer of home products and apparel, may go private if a proposal from its largest shareholder, Chelsey Direct LLC, to acquire all remaining shares is approved by the firm's board of directors.

In a statement issued late last month, the retailer, whose catalogs include Domestications and The Company Store, said Chelsey has proposed to purchase the common stock for $1.25 per share. Chelsey and its affiliates already own 69 percent of outstanding common stock, and have options and warrants to purchase up to 75 percent. Adding these to its ownership of all Series C Preferred Stock gives the investment firm 91 percent of Hanover's voting rights.

The retailer said that taking the firm private is necessary to stop a "financial drain" that Chelsey believes derives from its publicly traded status.

Notwithstanding the allegation of a drain, for the first three quarters of the 2005 fiscal year, Hanover Direct reported a profit of almost $11.2 million on sales of $286.7 million, compared with a loss the prior-year period of $52,000 on sales of $254.5 million.

For investors, that equated with a per-diluted-share profit of 34 cents, compared with flat results for the same period the year before.

Hanover Direct was delisted by the American Stock Exchange in early 2005 due to the continued inability to file its earnings report for the quarter ended Sept. 25, 2004; the inability to satisfy the requirements for minimum stockholders equity; and a failure to meet the Security and Exchange Commission's alternative financial standards. Hanover Direct currently trades on the Pink Sheets.

Hanover Direct executives did not return calls.
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Title Annotation:Hanover Direct Inc. to be acquired by Chelsey Direct L.L.C.
Comment:HANOVER EYED IN POTENTIAL TAKEOVER BY MAJORITY SHAREHOLDER.(Hanover Direct Inc. to be acquired by Chelsey Direct L.L.C.)
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Article Type:Brief article
Geographic Code:1USA
Date:Mar 13, 2006
Words:277
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