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) March 1, 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
Attached hereto as Exhibit A is a copy of the press release issued by
the Company on March 1, 1994 announcing that it has entered into a contract
for the sale of its assets and that it has filed a voluntary petition under
Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court in New York
City.
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: March 4, 1994 By: /S/ Robert E. Gregory, Jr.
Robert E. Gregory, Jr.
Chairman
Chief Executive Officer
<PAGE>
EXHIBIT A
Contact: Robert D. Siegfried
Kekst and Company
(212) 593-2655
New York, New York, March 1, 1994 -- The Gitano Group, Inc. announced today
that it has entered into a contract for the sale of its assets to Fruit of the
Loom, Inc. for $100 million cash. Fruit of the Loom submitted the highest bid
in a process started when Gitano's primary customer notified it this past
January that Gitano's violation of U.S. customs law, which took place in 1991
and 1992 under Gitano's prior management, prevented the customer from
continuing to do business with the Gitano Group.
Robert E. Gregory, Jr., Chairman and Chief Executive Officer of Gitano,
stated, "This transaction reflects the considerable values inherent in the
Gitano brand and the Gitano organization. Despite the sudden and unexpected
circumstances under which the company had to be sold, we believe that Gitano
represents a viable and strong business opportunity for Fruit of the Loom to
build another leading brand for the mass market."
To facilitate the prompt consummation of the sale, since the proceeds to be
received from the transaction are less than the $130 million owed by Gitano to
its secured lenders, Gitano also today filed a voluntary petition under
Chapter 11 reorganization of the Bankruptcy Code in U.S. Bankruptcy Court in
New York City and a motion for that Court's prompt approval of the sale
transaction. Such prompt approval is needed to prevent any disruption in its
business and to facilitate a smooth transition for the purchaser. Gitano
anticipates closing the sale transaction shortly after conclusion of the
hearing and the Court's ruling.
Pending the close of the sale, Gitano will continue to operate its business
and does not expect the Chapter 11 reorganization to have a significant impact
on its ongoing operations. To that end, Gitano also has filed several motions
with the Bankruptcy Court designed to facilitate the uninterrupted operation
of the Company, including a motion for permission to honor all obligations to
its associates in the ordinary course of business.
As previously indicated, Gitano achieved a return to profitability for the
quarter ended December 31, 1993 with an operating profit of $9 million and net
income of $3.8 million. For the full 1993 fiscal year, Gitano substantially
reduced its operating loss to $6.1 million and its net loss to $45 million.
Included in operating profits for the fourth quarter are gains of $5.1 million
from recovery of affiliated receivables written off in 1992 and $1.2 million
from restructuring activities.
In sharp contrast, for the comparable fourth quarter of 1992, Gitano had
incurred an operating loss of $125 million, including a $90.3 million
restructuring charge, and a net loss of $140 million. For the 1992 full year,
Gitano had an operating loss of $200.2 million and a net loss of $237.9
million.
Mr. Gregory stated, "Much has been achieved by the new management in the ten
months it has been in place. During the year we were able to improve all
critical business and financial areas at the company. As a result, we not
only returned to profitability in the 1993 fourth quarter, but we also paid
back the creditors during the year $137 million in principal and interest and
reduced our letter of credit obligations from $130 million to $10 million.
"These results are a testament to the strength of the Gitano brand and the
outstanding capabilities of the restructured and refocused Gitano
organization. Gitano is a leading jeans and sportswear brand and now has the
ability to grow its business based on this foundation."
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