REGIS CORPORATION TO EXTINGUISH MEI LITIGATION
MINNEAPOLIS, Dec. 14 /PRNewswire/ -- Regis Corporation (NASDAQ: RGIS) announced today that the United States Bankruptcy Court governing the bankruptcy proceedings of MEI Diversified, Inc. (MEI) has approved an agreement which will eliminate the lawsuit and resolve other matters between Regis and MEI. The transaction is scheduled to close upon the expiration of the ten-day appeal period. Regis has agreed to
provide Magicuts, Inc. with a substantial portion of the financing needed to facilitate Magicuts' purchase of the salon assets of MEI. The assets to be purchased by Magicuts include hair styling salons acquired from Regis in 1990 by MEI. In connection with the financing transaction, MEI and Regis have agreed to waive all claims against each other.
Regis has agreed to provide Magicuts with a loan of $5,850,000. The loan is collateralized by certain assets of Magicuts and has a term of 15 months. Magicuts will apply the proceeds of the loan primarily to the purchase of the MEI salon assets and, in addition, will issue preferred stock to Regis.
Regis, in term, has agreed to issue
500,000 newly issued shares of Regis common stock to MEI.
If, during the year following the closing of the transaction, the value of the Regis shares issued to MEI does not reach $8,750,000 for a specified period, Regis will be obligated to issue up to 200,000 additional shares to MEI. Paul D. Finkelstein, president and chief executive officer of Regis, commented, "It is clearly in the best interests of all parties for Regis to support the purchase of the MEI assets by Magicuts. This is an opportunity for Regis to settle a matter that has been the subject of protracted litigation and, as well, we are most comfortable in having an investment in Magicuts. Although we are presently studying the accounting ramifications of resolving this issue, it more than likely will give rise to a significant nonoperating charge to our second quarter earnings." Regis Corporation, based in Minneapolis, is the largest owner and operator of mall based hair and retail product salons in the world. Regis owns and operates more than 1400 hairstyling salons in four divisions: Regis Hairstylists, Mastercuts, Beauty Express and International. It has approximately 15,000 employees worldwide. -0- 12/14/93 /CONTACT: Paul D. Finkelstein, Frank E. Evangelist or Jack T. Holewa, 612-947-7000, of Regis Corporation; or David Walke or Amy Weisman, 212-850-5600, of Morgen-Walke Associates, for Regis Corporation/ (RGIS)
CO: Regis Corporation; MEI Diversified, Inc. ST: Minnesota IN: REA SU:
DB-CP -- MN002 -- 3462 12/14/93 07:57 EST
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|Date:||Dec 14, 1993|
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