SOURCE: Stock Marlet Alerts

February 04, 2010 10:32 ET

Trade Alert: Frederick's of Hollywood -- February 4, 2010

NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Stock Market Alerts LLC

MIAMI, FL--(Marketwire - February 4, 2010) - Stock Market Alerts' performance stock list includes: Frederick's of Hollywood Group Inc. (NYSE Amex: FOH), Microsoft Corp (NASDAQ: MSFT),, Inc. (NASDAQ: AMZN) and JPMorgan Chase & Co. (NYSE: JPM).

Yesterday, after the markets closed, Frederick's of Hollywood Group Inc. (NYSE Amex: FOH) issued a press release announcing that it has entered into an agreement to exchange, at a 50% discount, approximately $22.6 million of outstanding debt and preferred stock for approximately $11.3 million in common stock. The agreement was made with certain accounts and funds managed by and/or affiliated with Fursa Alternative Strategies LLC ("Fursa"), who are the holders of the Company's outstanding Tranche C Debt and Series A Preferred Stock, as well as one of the Company's largest common shareholders. The balance sheet effect of the transaction will increase shareholders' equity by approximately $22.6 million.

Fursa has agreed to exchange the Tranche C Debt, with an aggregate principal amount and accrued interest of approximately $14 million, and to convert approximately $8.6 million of Series A Preferred Stock and accrued dividends, into an aggregate of approximately $11.3 million in common stock. The effective conversion price per share will be calculated based on the volume weighted average price of the Company's common stock for ten trading days, including the five days prior to and the five days including and after today's announcement. Upon the closing of the transaction, the Company will also issue to Fursa three-, five- and seven-year warrants, each to purchase 500,000 shares of common stock at exercise prices of 150%, 175% and 200% of the conversion price, respectively, but not less than the closing sale price of the common stock on the closing date. All of the shares of common stock owned by Fursa upon completion of the transaction will be subject to a 12 month lock up agreement, subject to early release for a certain number of shares.

"Clearing our balance sheet of the Tranche C Debt and Series A Preferred Stock is a game changer for Frederick's of Hollywood. I want to thank Fursa, one of our largest, longstanding shareholders for their continued support of the Company and the confidence this agreement shows they have in our turnaround strategy," stated Thomas Lynch, the Company's Chairman and Chief Executive Officer. "Through this transaction, we are effectively repurchasing our outstanding long-term debt and preferred stock at a 50% discount. As a result, we will have significantly strengthened our balance sheet by increasing shareholders' equity by $22.6 million, eliminated further interest and dividend accruals and positioned our company to fully capitalize on our anticipated growth opportunities in the coming year."

The transaction is subject to shareholder approval and other customary closing conditions. The Company anticipates holding an annual meeting of its shareholders during the third fiscal quarter ending April 24, 2010, at which shareholders will be asked to approve the transaction. The Company expects to consummate the transaction as soon as practicable once shareholder approval is obtained. Fursa has agreed to "sterilize" their vote by committing to vote their shares of the Company's common stock and preferred stock at the shareholder meeting on this matter in accordance with the vote of a majority of votes cast at the meeting, excluding the shares held by Fursa.

The stock closed yesterday at $1.43 a share.

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Microsoft Corp (NASDAQ: MSFT) is up 0.5% on 61.3 million shares traded.

Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential., Inc. (NASDAQ: AMZN) is up 0.8% on 12.4 million shares traded., Inc. seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.

JPMorgan Chase & Co. (NYSE: JPM) is down 0.6% on 37.3 million shares traded.

JPMorgan Chase & Co. is a leading global financial services firm with assets of $2 trillion and operations in more than 60 countries.

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