Groupe Les Ailes de la Mode Inc.
TSX : MOD

Groupe Les Ailes de la Mode Inc.

August 09, 2005 08:08 ET

Groupe Les Ailes de la Mode Sells its Les Ailes Department Stores

BOUCHERVILLE, QUEBEC--(CCNMatthews - Aug. 9, 2005) - Groupe Les Ailes de la Mode inc. (TSX:MOD) ("Groupe" or "the Company") announced that it has closed the sale of all issued and outstanding shares and loans receivable of its wholly owned subsidiary Les Ailes de la Mode Incorporees ("Les Ailes") which operates the four Les Ailes department stores to The Fairweather Group for cash consideration of $6.2 million. Of the cash consideration, a portion of which is subject to certain adjustments, $4.2 million was paid at closing and $2.0 million is payable in three instalments in October and December 2005 and in February 2006.

"I am gratified to have been able to rebuild value in the Les Ailes department stores for the benefit of all of our stakeholders, creditors, shareholders, suppliers and employees," said David Margolis. "On its own, the Les Ailes department stores would have required significant capital investments to remain viable in the long term. As part of The Fairweather Group, it will now benefit from the scale, purchasing power and relationships as well as the synergies that a large retailer can bring. The Les Ailes concept will continue under new leadership while recognizing its important impact on the Quebec retail market. To that end, I am resigning my position as President and CEO, with a certain sense of accomplishment of having stabilized the Company. However, I have agreed to provide consulting services, if required, during the transition period" concluded David Margolis.

"We are excited about bringing in the Les Ailes banner within The Fairweather Group" said Isaac Benitah, President and CEO. "With over $75 million in revenues and 630 employees, Les Ailes has a solid foundation from which we can build by leveraging the significant assets and resources of the group and further improve the profitability of the stores" added Benitah. "We will continue to utilize the existing vendor base as well as adding new suppliers, which will broaden the appeal to the customers and provide an enhanced platform for future success and growth."

The Company also announced the appointment of Leslie E. Glazerman as interim Chief Executive Officer of the Groupe Les Ailes de la Mode in addition to his current responsibilities as interim Chief Financial officer.

"With 59 Bikini Village and Ocean Bikini Village boutiques in Quebec and Ontario, our swimwear division has established a viable model for growth and profitability as a specialty retailer" said Leslie Glazerman, interim Chief Executive Officer of Groupe Les Ailes de la Mode. "The division is set to report a significant year-over-year increase in sales for the second quarter due to an exceptional performance in June and July. In addition, the launch of a new line of branded active wear in early fall should satisfy our customers' appetite for complementary products while stimulating less seasonal sales. Additionally, merchandising strategies have been enhanced to include opportunistic purchasing which will continue to drive sales and improve margins. With a more stable foundation, we are continuing to review strategic, financial and operating measures to meet our longer-term financial needs and our strategic goals with a view to maximizing shareholder value" concluded Mr. Glazerman.

Financial impact of the transaction

With this transaction, Groupe realized $6.2M of its equity component of its wholly-owned subsidiary. The Company's Les Ailes operations will be reported as a discontinued operation in the Company's financial statements for historical and current periods presented as of July 30 2005. In 2004, the les Ailes department stores generated revenues of $77.2 million while the swimwear division recorded revenues of $33 million.

The Company will write down the carrying value of its investment in and loans to Les Ailes to the sale price, resulting in a non-cash charge to be recorded at the end of the second quarter of 2005 of approximately $3.2 million.

Taking into account estimated net proceeds received from the sale of its Les Ailes department stores, the Company had approximately $8.5 million in cash at closing. Groupe redeemed at par all of its outstanding secured debentures, or $3.7 million in principal amount plus accrued interest on August 5, 2005, leaving the long term debt remaining at approximately $12.3 million, consisting primarily of debentures. At the same date, total assets at book value stood at $16.9 million.

The Company paid the final instalment of $2.5 million to its unsecured creditors on July 29, 2005 in accordance with the terms of its 2003-2004 plan of reorganization.

ABOUT GROUPE LES AILES DE LA MODE

Groupe Les Ailes de la Mode inc.'swimwear division operates 59 swimwear boutiques in Quebec and Ontario under the Bikini Village and Ocean Bikini Village banners. Groupe employs 600 people.

Forward looking statements

This news release contains certain forward-looking statements concerning our future operations, economic performances, financial conditions and financing plans. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us and our subsidiaries or their businesses or operations.

We undertake no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

Contact Information

  • Groupe Les Ailes de la Mode Inc.
    Mark Boutet
    (514) 843-2385