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MEI DIVERSIFIED ANNOUNCES IT HAS RECEIVED APPROVAL TO SELL THE ASSETS OF MEI'S BEAUTY SALON SUBSIDIARIES

 MINNEAPOLIS, Aug. 18 /PRNewswire/ -- MEI Diversified Inc. (MEI), which is currently operating under protection of Chapter 11 of the Bankruptcy Code, announced today that on Aug. 17, 1993 it received Bankruptcy Court approval to sell substantially all of the assets of MEI's beauty salon subsidiaries, including MEI Salon Corp., The Glemby Company, Inc., Essanelle Salon Co., and Maxim's Beauty Salons, Inc. to Magicuts U.S.A., Inc. (Magicuts). The agreement submitted with Magicuts' bid specifies purchase price consideration of $28.5 million, which purchase price is subject to specified domestic and Canadian working capital adjustments based on the amount of current assets delivered and current liabilities assumed. Magicuts was the highest bidder at an auction held on July 27, 1993, with Helco, Inc. also participating as a qualified bidder. The salon asset sale motion was originally heard by the bankruptcy court on July 28, 1993, but was continued until Aug. 16, 1993 pending time for re-noticing all host department stores and other potential objecting parties. The Bankruptcy Court authorized MEI to proceed with the proposed sale subject to its written order and the parties agreement to a final asset purchase agreement.
 Magicuts is a corporation owned by Magicuts, Inc. and Onex Corporation, both of Toronto. Onex Corporation is a large Canadian- based diversified company with annual revenues in excess of $4.0 billion. Magicuts, Inc. of Canada is one of the largest hair salon operations in Canada operating principally in large department stores. The Magicuts bid offer included, in addition to the purchase price consideration, assumption of substantially all department store license agreements. A September 1993 closing on the salon asset sale is anticipated upon notifications and approval of U.S. and Canadian governmental requirements.
 Donald E. Benson, president of MEI, indicated that the sale of the salon assets was necessitated by a lack of funds needed to complete the turnaround of the salon businesses. MEI has been unable to provide sufficient funds for improvement to the salons because of substantial operating and cash losses incurred by MEI resulting from the purchase fraud alleged in its actions against the former owners of the business entities comprising MEI Salon Corp. and the mismanagement alleged in its lawsuit against Regis Corporation, the former manager of these businesses. Benson further indicated that after the sale is completed, MEI will proceed with the pursuit of claims against the former owners of the Salon businesses, including the Finkelstein family, Regis Corporation, its chairman Myron Kunin, its president, Paul D. Finkelstein, and certain other Regis executives. MEI expects that these matters will go to trial in late 1993 or early 1994.
 -0- 8/18/93
 /CONTACT: Donald E. Benson, president of MEI Diversified Inc., 612-339-8853/


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Publication:PR Newswire
Date:Aug 18, 1993
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