FIRST CAPITAL HOLDINGS CORP. CREDITORS ANNOUNCES SETTLEMENT WITH
SHEARSON AND OTHERS
LOS ANGELES, Ca--June 19, 1995--The Official Committee of
Unsecured Creditors (the "Creditors' Committee") for HREF="chap11.firstcapital.html">First Capital
Holdings Corp. ("FCH"), its wholly owned subsidiaries First Capital
Life Insurance Group Inc. ("FCL Group") and Fidelity Bankers
Insurance Group Inc. ("FB Group") (collectively the "Debtors"),
announced today that they have reached an agreement (the
"Settlement") with Shearson Lehman Brothers Inc. and Shearson Lehman
Brothers Holding Company Inc. (collectively, "Shearson") and a
number of FCH's current and former officers and directors
(collectively the "Defendants"), which resolves the claims which the
Creditors' Committee has been prosecuting against the Defendants.
Pursuant to the Settlement, Defendants will pay to the Debtors'
Chapter 11 estates the sum of $80 million plus interest, which will
help fund a contemplated plan of reorganization, and the Creditor's
Committee and the Debtors will release all claims they may have
against the Defendants.
The Settlement is conditioned on final documentation and entry
of a Bankruptcy Court order approving the settlement. The
Creditors' Committee and Debtors currently contemplate filing the
pleadings seeking entry of such an order by the end of June and
obtaining a hearing during early August, 1995.
In addition, a Memorandum at Understanding by and among the
Creditors' Committee and the senior bank group for whom Citibank,
N.A. acts as agent, regarding the terms of a proposed plan of
reorganization for the Debtors can now be implemented an a result of
the Settlement with Defendants. No plan or disclosure statement has
yet been filed with the Bankruptcy Court and implementation of the
Memorandum of Understanding is expressly contingent upon both: (1)
consummation of the Settlement of the litigation; and (2)
confirmation of a plan of reorganization implementing the Memorandum
The Memorandum of Understanding provides that bondholders who
currently hold bonds in the aggregate face amount of approximately
$120 million will receive their pro rata share of $6 million and, on
a pro rata basis together with the holders of general unsecured
claims, 20% of the net value of the following assets: (1) any
amounts received by the Debtors as a consequence of their
subordinated claims against First Capital Life Insurance Company
Inc. ("First Capital Life") pursuant to its rehabilitation plant,
(2) any proceeds from disposition by FCL Group of its 26% interest
in World Wide Reassurance Company Ltd.; (3) any investment of new
capital into FCH in conjunction with the plan of reorganization (not
to exceed $1 million to bondholders and $500,000 to general
unsecured creditors); and (4) any reduction of the aggregate amount
of certain administrative expenses below $7.0 million. It is
impossible at this time to predict the likely recovery as the result
of the First Capital Life rehabilitation plan, the likely sales
proceeds from a disposition of World Wide Reassurance Ltd. the
magnitude of any future equity investment in FCH, or the amount of
the reduction, if any, in the administrative claims.
If the cash on hand at the time of plan confirmation after
payment of all administrative expenses is less than $91.5 million
the distribution to general unsecured creditors and the holders of
FCH bonds will be reduced by 24.59% of any such shortfall. It is
impossible at the present time to determine whether the cash on hand
will total as much as the cash payment threshold, because the
calculation is net of all administrative priority expenses. The
cash on hand after the contemplated settlement in consummated will
be approximately $110.6 million. That cash will continue to accrue
interest pending confirmation of a plan. The administrative
priority expenses as of the effective date of any plan will be
substantial. The administrative claims already accrued at the
prevent time are approximately $20.0 million and additional fees
will accrue in the future. Most of these administrative claims are
still subject to Bankruptcy Court approval.
Because it is impossible to determine whether the cash on hand
when the plan is confirmed will reach the $91.5 million threshold,
or the value of the other assets in which bondholders may share,
neither FCH nor the Creditors' Committee has estimated at this tine
the actual distribution that will be made to bondholders if a plan
of reorganization based on the Memorandum of Understanding is
confirmed. Nor have they projected what interest, if any,
shareholders of FCH will be permitted to retain under any such plan
The Debtors and the Creditors' Committee believe that the
Memorandum of Understanding will form the basis of a plan of
reorganization. The Creditors' Committee has indicated an intent to
file a plan in the relatively near future. The Memorandum of
Understanding will, however, be implemented only if the settlement
is approved and consummated, and a plan of reorganization is
confirmed by the Bankruptcy Court.
/CONTACT: Veronica Collins of First Capital Holdings, 310-551-1000/
LESLIE FAY PLANS TO EMERGE FROM CHAPTER 11 LATER THIS YEAR REBUILT
AROUND ITS CORE DRESS AND SPORTSWEAR BUSINESSES
NEW YORK, New York--JUNE 19, 1995--The
Leslie Fay Companies, Inc. (NYSE: LES) today announced that, in consultation
with its Creditors' Committee and lenders, its Board of Directors
has approved a revised business plan for Leslie Fay to restructure
its core dress and sportswear businesses, creating a streamlined,
more focused company that will emerge from chapter 11 later this
Highlights of the plan are as follows:
o The restructured Leslie Fay will continue to serve its long-
standing department store customers with its Leslie Fay Dress,
Leslie Fay Evenings, Leslie Fay Sportswear and Outlander product
o As previously reported, the Sassco Fashions business will
either be sold to a private investor group led by its senior management or
spun off to such management and Leslie Fay's creditors. Sassco
manufactures women's suits, dresses and sportswear under the Kasper
for A.S.L. and Albert Nipon labels.
o The company may divest its Castleberry knitwear business and
will sell its ownership interest in Next Day Apparel and various trademarks.
o Creditors will receive new equity, debt or other
considerations in a holding company that will own the core businesses, as
well as cash resulting from a sale, or debt and equity securities from a
spin-off, of Sassco. It is highly unlikely that current equity
holders will retain or receive any value for their investment in
Leslie Fay other than, possibly, from pending litigation.
o The newly constituted Leslie Fay will be led by John J.
Pomerantz, Chairman and Chief Executive Officer. Other senior executives of
the streamlined company will include John Ward, President; and Cate
Bandel, Executive Vice President.
Leslie Fay will implement the foregoing transactions via a plan
of reorganization and disclosure statement, which are expected to be
filed with the U.S. Bankruptcy Court for the Southern District of
New York by the end of July. The plan and disclosure statement will
be subject to the approval of the court.
"During the past six months, we thoroughly evaluated a variety
of options to maximize the recovery to our creditors, including a
sale of the core businesses as going concerns," Mr. Pomerantz said.
"The Board has determined that the return to our creditors from
combining the dress and sportswear operations and significantly
reducing corporate overhead will provide the best value by creating
a leaner and more entrepreneurial organization.
"Needless to say, I am very pleased by this decision, because it
will enable Leslie Fay to be even more responsive to its loyal
customers in the moderate dress and sportswear markets. I am also
excited by the opportunity to rebuild the core Leslie Fay
businesses, which have been the heart and soul of this company for
nearly half a century.
"Leslie Fay's dress and sportswear businesses have performed
better in recent months than in a long time," Mr. Pomerantz said.
"We are offering an exciting product at a good value - and our
customers are getting a terrific response to it at the retail level.
This success is due in no small measure to the outstanding efforts
of our employees. We are extremely proud of them and look forward
to accomplishing even more now that our direction is clear and the
distractions of the past two years are behind us. There is still a
lot of hard work ahead, but we are optimistic that the company can
achieve significant improvements in its operating and financial
Mr. Pomerantz, 61, has been Chairman and Chief Executive Officer
of Leslie Fay since 1986. Mr. Ward, 42, is currently President of
the Leslie Fay Dress Group. He joined the company in 1989 as
Chairman of the Andrea Gayle division after holding senior
merchandising positions at B. Altman and Filene's. Ms. Bandel, 36,
is currently President of the Leslie Fay Sportswear Group. She
joined the company in January 1994 as President of Sales and
Marketing, Leslie Fay and Nipon Brands after holding senior
positions at several other garment manufacturers.
Founded in 1947, The Leslie Fay Companies, Inc., is one of the
nation's leading manufacturers of women's apparel, including
dresses, suits and sportswear. Its brand names include Leslie Fay,
Albert Nipon, Kasper for A.S.L., Castleberry, Outlander, and HUE.
CONTACT: James Fingeroth
Kekst and Company