SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 24, 1994
The Gitano Group, Inc.
(Exact name of registrant as specified in the charter)
Delaware 1-10101 22-2897129
(State or other jurisdiction (Commission IRS Employee
of incorporation) file number) identification no.)
1411 Broadway, New York, New York 10018
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code 212-819-0707
(Former name or former address, if changed since last report)
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Item 5. Other Events
On January 24, 1994, the Company reported that its principal customer
had advised the Company that its policies prohibit it from continuing to do
business with the Company because of the recent guilty pleas entered by Gitano
to violations of U.S. customs laws in 1991 and 1992. The customer indicated
that it would be willing to purchase the Company's products from another
company if it is not related to the Company. Accordingly, the Company's board
and new management have determined to seek a sale of the Company in order to
preserve the value of the "Gitano" brand name. A copy of the press release is
attached as Exhibit A.
On January 25, 1994, the New York Stock Exchange (the "NYSE") announced
that trading in the common stock of the Company will be suspended effective
immediately. Following suspension, application will be made by the NYSE to
the Securities and Exchange Commission to delist the issue.
The NYSE's action is being taken because of the Company's announcement
described above. The NYSE also noted that the Company has fallen below the
NYSE's continued listing criterion relating to net tangible assets available
to common stock (less than $8 million) together with three-year average net
income (less than $600,000). The NYSE noted that it may, at any time, suspend
a security if it believes that continued dealings in the security on the NYSE
are not advisable. A copy of the press release is attached as Exhibit B.
Item 6. Resignation of Registrant's Directors
On January 25, 1994, the Company reported the resignation of three of
its outside directors, Norman Matthews, Michael Goldstein and Kevin Kennedy. A
copy of the press release is attached as Exhibit C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GITANO GROUP, INC.
(Registrant)
Date: January 26, 1994 By: /S/ Robert E. Gregory, Jr.
Robert E. Gregory, Jr.
Chairman
Chief Executive Officer
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EXHIBIT A
Contact: Robert D. Siegfried
Kekst and Company
(212) 593-2655
New York, New York, January 24, 1994 -- Gitano Group, Inc. (NYSE:GIT) today
reported that its principal customer has advised the company that its policies
prohibit it from continuing to do business with Gitano because of the recent
guilty pleas entered by Gitano to violations of U.S. customs laws in 1991 and
1992. The customer has indicated that it would be willing to purchase Gitano
products from another company if it is not related to Gitano. Accordingly,
Gitano's board and new management have determined to seek a sale of The Gitano
Group in order to preserve the value of the Gitano brand name.
Robert E. Gregory, Jr., Chairman and Chief Executive Officer, stated, "It is
unfortunate that the efforts of the new management team to rebuild the company
have been undermined by the events which occurred in 1991 and 1992 under
Gitano's prior management and which do not relate to Gitano today under its
current management. At the same time, we respect the position of our valued
customer with respect to its policy, and recognize that, under the
circumstances, the sale of Gitano is the best means to serve the interests of
our company's constituents.
"In the past year that the new management team has been in place, considerable
progress has been achieved within Gitano. We substantially improved operating
results during 1993, and, we have been able to repay debt ahead of schedule.
The Company's improvement reflects the implementation of our new strategy
which has involved the conversion of Gitano from a manufacturing to a
marketing services company and the undertaking of a significant downsizing of
the company's operations and expense structure. As we previously reported, we
expected that Gitano would have had the opportunity to return to profitability
sometime in 1994 if we were able to continue the successful execution of the
strategy.
"As a result of what has been accomplished, the Gitano brand and organization
hold considerable value. This should enable us to attract strong interest
from potential purchasers. However, in light of current circumstances it is
unlikely that a sale of Gitano will realize an amount in excess of the $130
million owed by Gitano to its secured lenders.
"In moving forward with a sale of Gitano, our objective is to complete a
transaction as soon as possible in order to avoid any interruption of the $500
million in retail volume of products that are expected to be sold under the
"Gitano" brand name in 1994," Mr. Gregory concluded.
Gitano is a leading marketer of branded, high-quality apparel to mass
merchants and discounters.
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EXHIBIT B
Contact: Ray Pellecchia For Release: Immediately
(212) 656-2065 Tuesday,
January 25, 1994
NEW YORK, Jan. 25 -- The New York Stock Exchange announced today
that trading in the common stock of The Gitano Group, Inc. -- ticker
symbol GIT -- will be suspended immediately. Following suspension,
application will be made to the Securities and Exchange Commission to
delist the issue.
The Exchange's action is being taken because Gitano, on Jan. 24,
1994, announced it has determined to sell the company and that it is
unlikely that a sale of the company will realize an amount in excess of
the $130 million owed by Gitano to its secured lenders. The Exchange
also noted that Gitano has fallen below the NYSE's continued listing
criterion relating to net tangible assets available to common stock
(less than $8 million) together with three-year average net income (less
than $600,000).
The NYSE noted that it may, at any time, suspend a security if it
believes that continued dealings in the security on the NYSE are not
advisable.
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<PAGE>
EXHIBIT C
Contact: Robert D. Siegfried
Kekst and Company
(212) 593-2655
New York, New York, January 25, 1994 -- The Gitano Group, Inc. (NYSE:
GIT) reported today the resignation of three of its outside directors.
Yesterday, Gitano announced the necessity of seeking a buyer for the
company after its principal customer advised the company that its
policies prohibit it from continuing to do business with Gitano because
of the recent guilty pleas entered by Gitano and former executives to
violations of U.S. Customs laws in 1991 and 1992. The customer has
indicated that it would be willing to purchase Gitano products from
another company, if it were not related to Gitano.
Robert E. Gregory, Jr., Chairman and Chief Executive Officer, stated,
"Gitano would like to express its appreciation to the outside directors
for their counsel and contributions to Gitano over the years and
particularly during 1993, in helping new management turn Gitano around.
With the process to sell Gitano underway, these directors believe that
their contribution to Gitano is complete and they can now focus on their
other business interests".
The three outside directors, Norman Matthews, Michael Goldstein and
Kevin Kennedy, commended Gitano's new management team for its major 1993
turnaround in Gitano's operating results and its ability to
significantly reduce debt in 1993.
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