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MEI DIVERSIFIED ENTERS INTO AGREEMENT WITH HEICO TO SELL ASSETS OF SUBSIDIARIES

 MINNEAPOLIS, June 25 /PRNewswire/ -- MEI Diversified Inc. (MEI), which is currently operating under protection of Chapter 11 of the Bankruptcy Code, announced today that it has entered into an agreement with Heico Inc. (Heico) 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 (Salons). The agreement specifies purchase price consideration of $27.2 million, including assumption of liabilities not to exceed $17.5 million, which purchase price is subject to specified adjustments based on the amount of assets delivered and liabilities assumed. The agreement is conditional on bankruptcy court approval and contemplates that an auction will be conducted to sell the assets to the highest bidder. MEI anticipates that a hearing confirming the sale to the highest bidder will be conducted on or about July 28, 1993.
 Gary Hollister, president of MEI Salon Corp., stated that "since the filing of our Chapter 11 proceeding we have made significant progress in controlling costs, but the key to cost containment and the turnaround of the business is the continued support of the host department stores. One of the most important considerations necessary to obtain this support is the ability to make capital improvements in our operating locations and increase salon sales within each department store group. A significant element of the Heico agreement is Heico's willingness and ability to commit up to $30 million for capital improvements."
 Donald E. Benson, president of MEI Diversified Inc., indicated that the funds required for such capital improvements would not be otherwise available to MEI without the participation of outside investors. To date MEI has not been successful in attracting outside funds to complete the turnaround of the business. MEI has been unable to provide sufficient funds for improvements 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 a plan of reorganization centered on its NDM subsidiary and the pursuit of claims against Merrill Lynch and 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 1994.
 Heico Inc. is a private investment group which focuses it activities on acquiring troubled businesses and those with turnaround potential. Formed in 1979, Heico has interests in more than 20 separate operating companies. It recently acquired Tom's Foods, one of the largest manufacturers and distributors of snack foods in the United States, and presently has operating control of the Nutri/Systems Inc. weight-loss chain.
 -0- 6/25/93
 /CONTACT: Donald E. Benson, president of MEI Diversified, 612-339-8853, or Gary Hollister, president of MEI Salon Corp., 612-936-4301/


CO: MEI Diversified; Heico Inc. ST: Minnesota IN: SU:

MA -- MN015 -- 5891 06/25/93 17:14 EDT
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Publication:PR Newswire
Date:Jun 25, 1993
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