================================================================= SPIEGEL BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2003 (ISSN XXXX-XXXX) March 18, 2003 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- SPIEGEL BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's cases. New issues are prepared by Daisy V. Flores, Frauline Sinson-Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of SPIEGEL BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO SPIEGEL BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF SPIEGEL GROUP [00002] CONSOLIDATED BALANCE SHEET AT FEBRUARY 22, 2003 [00003] SPIEGEL'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] SPIEGEL DEBTORS' CHAPTER 11 DATABASE [00005] LIST OF SPIEGEL'S 30-LARGEST UNSECURED CREDITORS [00006] ORGANIZATIONAL MEETING WITH US TRUSTEE TO FORM COMMITTEES [00007] DEBTORS' MOTION TO OBTAIN $400 MILLION OF DIP FINANCING KEY DATE CALENDAR ----------------- 03/17/03 Voluntary Petition Date 04/01/03 Deadline for filing Schedules of Assets and Liabilities 04/01/03 Deadline for filing Statement of Financial Affairs 04/01/03 Deadline for filing Lists of Leases and Contracts 04/06/03 Deadline to provide Utilities with adequate assurance 05/16/03 Deadline to make decisions about lease dispositions 06/15/03 Deadline to remove actions pursuant to F.R.B.P. 9027 07/15/03 Expiration of Debtors' Exclusive Plan Proposal Period 09/13/03 Expiration of Debtors' Exclusive Solicitation Period 03/16/05 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Committees First Meeting of Creditors pursuant to 11 USC Sec. 341 Deadline for Filing Proofs of Claim ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO SPIEGEL BANKRUPTCY NEWS ----------------------------------------------------------------- SPIEGEL BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of SPIEGEL BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving SPIEGEL BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990, starting with Federated Department Stores. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) SPIEGEL BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's cases. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of SPIEGEL BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF SPIEGEL GROUP ----------------------------------------------------------------- Spiegel, Inc. 3500 Lacey Rd. Downers Grove, Illinois 60515-5432 Telephone (630) 986-8800 Fax (630) 769-2012 http://www.spiegel.com Employing 16,700 workers, the Spiegel Group is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. Spiegel's retail business operates through its three merchant divisions: Eddie Bauer, Spiegel Catalog, and Newport News. For the fiscal year ended December 31, 2002, the Company generated approximately $2.5 billion in revenue. The Spiegel Group traces its history to 1865 -- the end of the Civil War in the United States -- when Joseph Spiegel opened Spiegel & Company, a furniture retailer. Over the years, Spiegel has been an innovator and leader in the direct marketing industry, producing its first catalog in 1905, and accepting orders over the telephone beginning in 1943. Spiegel Holdings, Inc., holds 100% of the Company's Class B voting common stock, affording SHI control of Spiegel, Inc. In 1988, the Company acquired Eddie Bauer, Inc. and certain related Canadian assets. In 1990, the Company acquired First Consumers National Bank. FCNB is a special-purpose bank specializing in the issuance of credit cards. In 1993, the Company acquired New Hampton, Inc. In 1995, New Hampton's name was changed to Newport News, Inc. In 1997, the Company incorporated its Spiegel Catalog division as a separate subsidiary parallel to Eddie Bauer and Newport News. The Spiegel Group is a leading, international specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and retail stores in addition to credit services to qualifying customers who buy from Eddie Bauer, Spiegel and Newport News. The apparel category -- 75% to 80% of sales -- includes a wide array of men's and women's private-label and branded merchandise in various styles, including seasonal product offerings. Home furnishings -- 20% to 25% of sales -- range from traditional to contemporary styles, including accent pieces, decorative accessories, bed and bath, kitchen accessories and small appliances, home electronics, window treatments and rugs. The other merchandise category includes items such as fitness and personal care equipment, toys, cameras and luggage. The Company's product development and sourcing teams are a significant element of its private-label merchandise strategy. Manufacturers are selected based on their ability to produce high quality product on a cost-effective basis. Product design teams select and source fabrics to be delivered to manufacturers along with product patterns, specifications and templates used for cutting fabric and other pre-production work. Prototype samples are submitted to the merchant divisions for final production approval to ensure manufacturer compliance with specifications. The Company does not have any manufacturing facilities; third- party contractors handle all production. The product development and sourcing teams closely monitor the timeliness of manufacturers' delivery to the Company's distribution facilities and provide them with packaging information. The Company believes this strategy permits maximum flexibility, enhanced inventory management and consistent quality control without the risks associated with operating its own manufacturing facilities. The three merchant divisions sell domestically produced and imported merchandise that's purchased in the open market from some 1,900 suppliers -- none of which supply more than 5% of what the Company buys. A significant amount of the dollar value of merchandise purchased is imported directly from the Far East and Europe. ________________ | EDDIE BAUER | Eddie Bauer is a leading tri-channel specialty | retailer serving the casual lifestyle needs of $1.5 Billion | men and women through the sale of high quality in 2002 Sales | private-label apparel, accessories and home ________________| furnishings. Eddie Bauer markets its products through 535 retail stores, catalogs and e- commerce sites. Total net sales at Eddie Bauer topped $1.5 billion in 2002 -- 73% of those sales taking place in retail and outlet stores in fiscal 2001 and 86% of those sales generated by apparel. Eddie Bauer employs 11,000 full-time and part-time workers. A key strategy for Eddie Bauer is to leverage synergies between its multiple marketing channels, maximizing cross- promotional opportunities. This strategy includes: referring retail store customers to the catalog order desk within stores for additional merchandise and size options; utilizing the catalog customer database to help identify potential store locations; using catalog space to advertise the retail concept and e-commerce sites; utilizing retail store mailing lists to help build the catalog customer file; store locator on e-commerce site; and ability to order from the catalog on the Internet. Eddie Bauer has a joint venture arrangement Otto-Sumisho, Inc. (a joint venture company of Otto Versand, a related party, and Sumitomo Corporation) to sell in Japan. Another joint venture agreement with Heinrich Heine GmbH and Sport-Scheck GmbH (both subsidiaries of Otto Versand) puts Eddie Bauer products in retail stores and catalogs in Germany. Eddie Bauer also has licensing arrangements with Ford Motor Company, which uses the Eddie Bauer name and logo on special series Ford vehicles, as well as arrangements with Gold Bug, Inc., The Lane Company (a division of Furniture Brands International); American Recreation Products, Inc.; Cosco, Inc., a manufacturer of infant and juvenile car seats and strollers; Baby Boom Consumer Products, Inc., a manufacturer of infant products, and Imperial Wall Coverings. ________________ | NEWPORT NEWS | Newport News is a specialty direct marketer | offering fashionable, moderately priced women's $414 Million | apparel and home furnishings through catalogs in 2002 Sales | and its e-commerce site. Total net sales were ________________| $141 million in 2001 generated from distribution of hundreds of millions of catalogs. Apparel accounts for 90% of Newport News' sales. Although Newport News specializes in swimwear and jeans, all women's apparel categories, including footwear, are well represented. The Newport News home furnishings category consists primarily of bed, bath and decorative accessories. ________________ | SPIEGEL CATALOG | A direct marketer, Spiegel has developed its | strong brand identity by working to understand $617 Million | and satisfy its customers with a broad in 2002 Sales | assortment of sophisticated, high-quality ________________| apparel and home merchandise marketed through its semi-annual catalog, various specialty catalogs and e-commerce sites. Spiegel offers overstock, end-of- season and other merchandise through its Ultimate Outlet stores, which are predominately located in outlet malls, and through catalogs and the ultimateoutlet.com e-commerce site. Total net sales were $617 million in 2002 -- down sharply from prior years -- 92% of which were through its direct channel. Spiegel mails over 100 million catalogs annually and has a 3-plus million list of customers who've bought something within the past 18 months. At Spiegel, apparel generates 52% of sales and home furnishings and other merchandise represents 48% of net sales. DFS -- Distribution Fulfillment Services, Inc. -- provides fulfillment, supplies purchasing, and accounts payable services for the Merchant Companies. DFS has two facilities in Columbus, Ohio, commonly referred to as the Groveport and the Fisher Road operations. At Fisher Road, DFS performs the following services: retail processing services primarily for Eddie Bauer; fulfillment of direct to consumer large items ; shipping and transportation coordination for Spiegel, Eddie Bauer and Newport News; retail and large item returns processing; and accounts payable processing for Spiegel and Spiegel Catalog. At Groveport, DFS performs the following services: assembly-ship services primarily for Spiegel Catalog and Eddie Bauer, direct-to-consumer returns and retail returns processing. In addition, at the Groveport location, DFS handles the purchasing of goods and services (excluding merchandise) for all Debtor locations, processes accounts payable for all locations for non-merchandise purchases, and processes merchandise accounts payable for Spiegel Catalog. DFS employs 1,300 individuals. SGTS -- Spiegel Group Teleservices, Inc. and Spiegel Group Teleservices-Canada, Inc. -- operate call centers that perform customer order and customer service functions on behalf of the Merchant Companies. SGTS currently operates a network of five call centers located in Rapid City, South Dakota; Bothell, Washington; Hampton, Virginia, Saint John, New Brunswick, Canada and Sydney, Nova Scotia, Canada. SGTS employs 2,200 individuals. ----------------------------------------------------------------- [00002] CONSOLIDATED BALANCE SHEET AT FEBRUARY 22, 2003 ----------------------------------------------------------------- Spiegel, Inc. and Subsidiaries Consolidated Balance Sheets At February 22, 2003 ASSETS Current assets: Cash $74,499,750 Receivables 39,433,436 Less: Bad Debt Reserve (2,965,219) Inventories 459,323,563 Less: Inventory Reserve (44,596,931) Prepaid Advertising 31,188,908 Other Prepaid Expenses 22,402,379 Deferred Income Tax Benefit 25,650 -------------- Total current assets 579,311,534 Investments & Advances 634,856,596 Fixed Assets: Land 16,883,404 Building 163,850,782 Less: Depreciation (41,035,546) Furniture & Fixtures 310,191,944 Less: Depreciation (215,603,070) Leasehold Improvements 165,799,117 Less: Depreciation (109,495,563) Construction in Process 6,897,215 Intangible assets, net 135,720,936 Other assets 90,097,513 -------------- Total assets $1,737,474,862 ============== LIABILITIES and STOCKHOLDERS' EQUITY Current liabilities: Accounts Payable $104,621,038 Gift Certificates & Customer Credits 52,401,067 Salaries, Wages & Benefits 46,724,655 General, Sales & Use Taxes 60,550,197 Allowances for Future Returns 26,878,506 Other Liabilities 69,981,497 -------------- Total Accounts Payable and Accrued Liabilities 361,156,959 Federal Income Taxes 85,141 Current Long Term Debt 1,300,857,000 Net Assets of Discontinued Operations 44,719,106 Deferred Taxes (57,030) -------------- Total liabilities 1,706,761,176 Stockholders' equity 30,713,686 -------------- Total liabilities & stockholders' equity $1,737,474,862 ============== ----------------------------------------------------------------- [00003] SPIEGEL'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- DOWNERS GROVE, Illinois -- March 17, 2003 -- The Spiegel Group (Spiegel, Inc.) today announced that, in order to address its financial and operational challenges, the company and its principal operating subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Spiegel also announced that the company had secured a $400 million senior secured debtor-in-possession (DIP) financing facility from Bank of America, N.A., Fleet Retail Finance, Inc., and The CIT Group/Business Credit, Inc. Banc of America Securities LLC arranged this financing. This facility will be used to supplement the company's existing cash flow during the reorganization process. The company anticipates that this financing, together with its current cash reserves and cash flow from its operations, will be sufficient to fund its operations during the reorganization process. The company expects to be able to access $150 million of this facility upon Bankruptcy Court approval of an interim financing order. Access to the full facility is subject to final Bankruptcy Court approval at a later date and satisfaction of certain other conditions. During this process, the company expects to continue to provide the same high-quality goods and services as it has in the past. All stores and catalog operations are open and serving customers. The company's gift certificates and merchandise credits will be honored as always and its return and exchange policies will not be affected by the filing. The Spiegel Group companies included in the filing are continuing to pay employee wages and salaries, to offer the same medical, dental, life insurance, disability and other benefits and to accrue vacation time without interruption. In conjunction with today's filing, the company filed a variety of "first day motions" to support its associates and vendors, together with its customers and other stakeholders, during this process. The court filings include requests to approve the interim DIP financing and maintain existing cash management programs; to retain legal, financial and other professionals to support the company's reorganization case; and for other relief. During the restructuring process, vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization. "This filing is an important step in a controlled process that we expect will allow The Spiegel Group to address its immediate liquidity needs, restructure its debt obligations and other financing arrangements and improve its prospects for future growth and profitability," said William C. Kosturos, chief restructuring officer and interim chief executive officer of The Spiegel Group. "We are grateful for the loyalty and commitment of our associates and the constructive relationships with our vendors and service providers." The company's bank subsidiary, First Consumers National Bank (FCNB), and FCNB's subsidiary are not part of the filing. The bank is being liquidated under the terms of a preexisting consent order entered into with the Office of the Comptroller of the Currency in May 2002. As previously disclosed, the company is no longer honoring the private- label credit cards issued by FCNB to customers of Spiegel's merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). FCNB also recently discontinued charging privileges on all MasterCard and Visa bankcards issued by FCNB to its customers. While the inability of customers to use their private-label cards to make purchases from the merchant companies will adversely affect the company's net sales, the company cannot yet predict the severity of this decline. In order to enable its merchant companies to issue new private-label credit cards as soon as possible, the company is actively seeking a third-party service provider to finance and service receivables generated from these new cards. As previously announced, the company appointed William Kosturos, a managing director at Alvarez and Marsal, as interim CEO and chief restructuring officer, effective March 1, 2003. Together with the company's management team, he will be actively engaged in advising the company on reorganization matters and working to rebuild and reposition the company. The company also has retained Alvarez & Marsal as advisors. In its filing documents, Spiegel, Inc and its filing subsidiaries listed total assets with a book value of $1.737 billion and total liabilities of $1.706 billion as of February 22, 2003. About the Company The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, 560 specialty retail and outlet stores, and e- commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. The company's Class A Non- Voting Common Stock trades on the over-the-counter market ("Pink Sheets") under the ticker symbol SPGLA. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com ----------------------------------------------------------------- [00004] SPIEGEL DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor entities filing separate chapter 11 petitions: Case No. Debtor -------- ------ 03-11539 Newport News, Inc. 03-11540 SPIEGEL, INC. 03-11541 Spiegel Catalog, Inc. 03-11542 Spiegel Publishing Co. 03-11543 Ultimate Outlet Inc. 03-11544 Spiegel Catalog Services, LLC 03-11545 Spiegel Marketing Corporation 03-11546 Spiegel Management Group, Inc. 03-11547 Eddie Bauer, Inc. 03-11548 Eddie Bauer Diversified Sales, LLC 03-11549 Eddie Bauer International Development, LLC 03-11550 Eddie Bauer Services, LLC 03-11551 Eddie Bauer of Canada, Inc. 03-11552 Newport News Services, LLC 03-11553 New Hampton Realty Corp. 03-11554 Distribution Fulfillment Services, Inc. 03-11555 Spiegel Group Teleservices, Inc. 03-11556 Spiegel Group Teleservices Canada, Inc. 03-11557 Retailer Financial Products, Inc. 03-11558 Gemini Credit Services, Inc. Chapter 11 Petition Date: March 17, 2003 Bankruptcy Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green, 5th Floor New York, New York 10004-1408 Telephone (212) 668-2870 Bankruptcy Judge: The Honorable Cornelius Blackshear Debtors' Bankruptcy Counsel: James L. Garrity, Jr., Esq. Marc B. Hankin, Esq. Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Telephone (212) 848-4000 Fax (212) 848-7179 Debtors' Bankruptcy Advisors: Alvarez & Marsal, Inc. 101 East 52nd Street, 6th Floor New York, NY 10022 Telephone (212) 759-4433 Fax (212) 759-5532 - and - Alvarez & Marsal, Inc. 55 West Monroe Street, Suite 3700 Chicago, IL 60603 Telephone (312) 601-4220 Fax (312) 803-1875 William C. Kosturos, is serving as Interim Chief Executive Officer and Chief Restructuring Officer, and Peter Briggs, William Roberti, Daniel Ehrmann, Doug Lambert, Scott Brubaker, Nate Arnett, and Vince Hsieh serve as Assistant Restructuring Officers Debtors' Financial Advisor: Henry S. Miller Miller Buckfire Lewis & Co., LLC 1301 Avenue of the Americas, 42nd Floor New York, NY 10019 Telephone (212) 895-1801 Fax (212) 895-1850 fax Claims Agent: Ron Jacobs Bankruptcy Services LLC Heron Tower 70 East 55th Street, 6th Floor New York, New York 10022 Telephone (212) 376-8902 U.S. Trustee: Carolyn S. Schwartz Office of United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 ----------------------------------------------------------------- [00005] LIST OF SPIEGEL'S 30-LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Commerzbank AG Bank Debt $103,000,000 20 South Clark Street Suite 2700 Chicago, IL 60603 Phone 312-236-5300 Fax 312-236-3275 Attn: Mark D. Monson, Vice President Dresdner Kleinwort Bank Debt $92,500,000 Wasserstein 1301 Avenue of the Americas New York, NY 10019-6118 Phone 212-429-2100 Fax 212-429-2127 Attn: Gerd Lengfeld, Director DZ Bank AG (Deutsche Zentral Bank Debt $86,000,000 Genossenschaftsbank) DG Bank Building 609 Fifth Avenue New York, NY 10017-1021 Phone 212-745-1574 Fax 212-745-1556 Attn: Jochen Breiltgens, Vice President Bank of America Bank Debt $85,857,142 231 South LaSalle Street Chicago, IL 60697 Phone 312-828-3122 Fax 312-974-8974 Attn: Patricia P. DelGrande, Managing Director Deutsche Bank AG Bank Debt $78,500,000 31 West 52nd Street, 24th Fl. New York, NY 10019 Phone 212-469-8237 Fax 212-469-2930 Attn: Rolf-Peter Mikolayczk, Managing Director Landesbank Hessen-Thuringen Bank Debt $76,000,000 420 5th Avenue, 24th Fl. New York, NY 10018 Phone 212-703-5220 Fax 212-703-5256 Attn: Fred W. Musch, Senior Vice President Bankgesellschaft Berlin Bank Debt $71,000,000 AG, Zentrales Firmenkundengeschaft, Hardenbergstrasse 32 Postfach 121709 D-1000 Berlin 12 GERMANY Phone 011-4930-3109-2978 Fax 011-4930-3109-3725 Attn: Klaus Henner Schuett, Managing Director J.P. Morgan Chase & Co. Bank Debt $66,000,000 380 Madison Avenue, 9th Floor New York NY 10017 Phone 212-270-0426 Fax 212-622-3783 Attn: Tom Maher Westdeutsche Landesbank Bank Debt $56,000,000 1211 Avenue of the Americas New York, NY 10036 Phone 312-930-9200 Fax 312-930-9281 Attn: Klaus Nuenning, Vice President ABN AMRO North America, Inc. Bank Debt $52,500,000 135 South LaSalle Street Chicago, IL 60603 Phone 312-904-4912 Fax 312-904-1821 Attn: John E. Robertson, Group Vice President The Bank of New York Bank Debt $52,500,000 One Wall Street New York, NY 10286 Phone 212-635-7869 Fax 212-635-1483 Attn: Charlotte Sohn Fuiks, Vice President HSBC Bank USA Bank Debt $52,500,000 New York Branch 452 Fifth Avenue New York, NY 10018 Phone 212-525-2474 Fax 212-525-2479 Attn: Anne Serewicz, Senior Vice President HypoVereinsbank, Bayerische Bank Debt $46,000,000 Hypo-und Vereinsbank AG 150 East 42nd Street New York, NY 10017-4679 Phone 212-672-5385 Fax 212-672-5529 Attn: Curt Schade, Managing Director Den Danske Bank Bank Debt $41,000,000 280 Park Avenue New York, NY 10017-1218 Phone 212-984-8402 Fax 212-599-2493 Attn: Lars Emmery, Vice President Norddeutsche Landesbank Bank Debt $41,000,000 Girozentrale 1114 Avenue of the Americas, 37th Floor New York, NY 10036 Phone 212-812-6805 Fax 212-812-6860 Attn: Josef Haas, Vice President Credit Suisse First Boston Bank Debt $38,000,000 The AT&T Building, 42nd Fl. 227 West Monroe Chicago, IL 60606 Phone 312-750-3252 Fax 312-750-0661 Attn: Charles B. Edelstein, Managing Director Credit Lyonnais Bank Debt $21,000,000 1301 Avenue of the Americas New York, NY 10019-6022 Phone 212-261-7177 Fax 212-459-3174 Attn: Richard Laborie, Vice President Intesa BCI Bank Debt $21,000,000 New York Branch One William Street New York, NY 10004 Phone 212-607-3862 Fax 212-809-2124 Attn: Antonio DiMaggio, Vice President Morgan Guaranty Trust Co. Bank Debt $12,500,000 of New York 380 Madison Avenue, 9th Flr. New York, NY 10017 Phone 212-270-0426 Fax 212-622-3783 Attn: Tom Maher R.R. Donnelley Vendor $3,431,045 77 W. Wacker Drive Chicago, IL 60601 Phone: 312-326-8373 Fax: 312-326-8344 Attn: Ruby Kerr D Clase Apparel Intl Vendor $2,071,367 Carr Luperon KM 61/2 Parque Indust Zona Franca Gurabo Stgo DOMINICAN REPUBLIC Phone: 954-838-0088 Fax: 809-736-7584 Attn: Armando De Los Santos Controller Monty Vendor $1,932,744 Calle 19, #113 Montecristo Merida, Yucatan MEXICO 97133 Phone: 011-52-9999-447668 Fax: 011-52-9999-4433688 Attn: James Poon, President AT&T Utility $1,225,572 One AT&T Way Bedminster, NJ 07921 Phone: 312-230-2495 Attn: Jaames Grudus Kentucky Apparel LLP Vendor $1,194,593 1001 Capp Harlan Road Tompkinsville, KY 42167 Phone: 270-487-0322 Fax: 270-487-0387 Attn: Dave Wilkerson, CFO International Paper Co. Vendor $964,960 6400 Poplar Road, Tower 1 Memphis, TN 38197 Phone: 901-419-7485 Fax: 901-419-7698 Attn: Robert Mundy, Director of Finance Yale de Mexico Vendor $959,197 Calzada Javier Rojo Gomez #1330 Col Barrio San Miguel Iztapalap CP 09370 DF MEXICO Phone: 011-52-55-5-686-0011 Fax: 011-52-55-5-686-0855 Attn: Mateo Beja, President Seta Corp. Vendor $789,755 6400 E Rogers Circle Boca Raton, FL 33499 Phone 561-994-2660 Fax: 561-997-5975 Attn: John Amatangelo, CFO Provell Vendor $633,232 301 Carlson Parkway Minnetonka, MN 55305 Phone 952-258-2184 Fax: 952-258-2100 Attn: Brad Beckman, CFO Grupo M Industries Vendor $611,261 c/o CBI Resources 7435 West 18th Lane Hialeah, FL 33014 Phone: 305-826-8568 (x223) Fax: 305-826-8604 Attn: Orsman Rodriquez Inland Paperboard Vendor $480,015 & Packaging P.O. Box 360853M Pittsburgh, PA 15250 Phone: 740-383-4061 (x108) Fax: 740-383-2752 Attn: Jennifer Justus, Controller ----------------------------------------------------------------- [00006] ORGANIZATIONAL MEETING WITH US TRUSTEE TO FORM COMMITTEES ----------------------------------------------------------------- Carolyn S. Schwartz, the United States Trustee for Region II, will contact each of Spiegel's 30-largest unsecured creditors to invite them to an organizational meeting for the purpose of forming one or more official committees of unsecured creditors. To determine the time, date and place for that meeting, contact the U.S. Trustee's office at (212) 510-0500. Creditors interested in serving on a Committee should complete and return a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under 11 U.S.C. Sec. 1102, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Immediately following the U.S. Trustee's determinations about how many official committees will be appointed and who will be appointed to each committee, the newly formed committees convene their initial meeting. The first order of business is to listen to the U.S. Trustee explain the powers and duties of the committee as a whole and members' individual responsibilities. The Committee will generally elect a chairman. Thereafter, the Committee typically conducts beauty pageants to select their legal and financial advisors. ----------------------------------------------------------------- [00007] DEBTORS' MOTION TO OBTAIN $400 MILLION OF DIP FINANCING ----------------------------------------------------------------- Spiegel obtained pre-petition financing from a variety of sources and owes, as of the Petition Date: Secured Loans Spiegel and DFS are the borrowers under two secured term loans, obligating them to repay: $24,000,000 to Norddeutsche Landesbank Gironzentrale and $24,000,000 to Deutsche Bank, AG. These two Loans are secured by DFS' warehouse and distribution facilities in Columbus, Ohio. The Secured Term Loans are guaranteed by each of the Subsidiary Guarantors other than DFS. Guaranteed Revolving Bank Loans $600,000,000 under an unsecured Amended and Restated Revolving Credit Agreement, dated as of June 26, 2001, with a lending consortium comprised -- according to http://www.LoanDataSource.com -- of: Deutsche Bank AG, New York Branch $66,000,000 J.P. Morgan Chase Bank $66,000,000 Bank of America, N.A. $54,000,000 Commerzbank AG $54,000,000 ABN AMRO Bank N.V. $45,000,000 The Bank of New York $45,000,000 Dresdner Bank AG $45,000,000 HSBC Bank USA $45,000,000 Bankgesellschaft Berlin AG $18,000,000 Credit Lyonnais Americas $18,000,000 Credit Suisse First Boston $18,000,000 DG Bank Deutsche Genossenschaftsbank AG $18,000,000 Danske Bank $18,000,000 Landesbank Hessen-Thuringen Girozentrale $18,000,000 Bayerische Hypo Und Vereinsbank AG $18,000,000 Intesabci, New York Branch $18,000,000 Norddeutsche Landesbank Girozentrale $18,000,000 Westdeutsche Landesbank Girozentrale $18,000,000 for which Deutsche Bank AG and J.P. Morgan Securities, Inc., as agents. $150,000,000 under an unsecured 364-Day Revolving Credit Agreement, dated as of June 30, 2000 with a lending consortium comprised -- according to http://www.LoanDataSource.com -- of: Deutsche Bank AG $12,500,000 Morgan Guaranty Trust Co. of New York $12,500,000 Bank of America, N.A. $9,000,000 Commerzbank AG $9,000,000 ABN AMRO Bank N.V. $7,500,000 The Bank of New York $7,500,000 Dresdner Bank AG $7,500,000 HSBC Bank USA $7,500,000 Bankgesellschaft Berlin AG $3,000,000 Credit Lyonnais Americas $3,000,000 DG Bank Deutsche Genossenschaftsbank AG $3,000,000 Danske Bank $3,000,000 Landesbank Hessen-Thuringen Girozentrale $3,000,000 Bayerische Hypo Und Vereinsbank AG $3,000,000 Intesabci, New York Branch $3,000,000 Norddeutsche Landesbank Girozentrale $3,000,000 Westdeutsche Landesbank Girozentrale $3,000,000 for which Deutsche Bank AG and J.P. Morgan Securities, Inc., also serve as agents. The two Revolving Credit Facilities are guaranteed by Debtors Eddie Bauer, Inc., Newport News, DFS, Ultimate Outlet Inc. and Spiegel Publishing Co. Guaranteed Term Loans $390,000,000 is owed under 16 separate unsecured term loans provided by various financial institutions: DZ Bank AG, Deutsche Zentral-Genossenschaftsbank $25,000,000 DZ Bank AG, Deutsche Zentral-Genossenschaftsbank $20,000,000 DZ Bank AG, Deutsche Zentral-Genossenschaftsbank $20,000,000 Landesbank Hessen-Thuringen $20,000,000 Landesbank Hessen-Thuringen $20,000,000 Landesbank Hessen-Thuringen $15,000,000 Bankgesellscaft Berlin Aktiengesellschaft $30,000,000 Bankgesellscaft Berlin Aktiengesellschaft $20,000,000 Norddeutsche Landesbank Gironzentrale $20,000,000 Dresdner AG $40,000,000 Commerzbank Aktiengesellschaft $40,000,000 Westdeutsche Landesbank Girozentrale $35,000,000 Bayerische Hypo-Und Vereinsbank AG $25,000,000 Bank of America, N.A. $22,857,142 Credit Suisse First Boston $20,000,000 Danske Bank A/S $20,000,000 all of which also extended credit under the Revolving Credit Facilities. Each Unsecured Term Loan is guaranteed by the Subsidiary Guarantors. Loans from Otto Versand $160,000,000 to Otto-Spiegel Finance G.m.b.H. & Co. KG under three senior unsecured notes. The Debtors can't borrow any more money under any of these credit facilities. Further, securitization of new accounts receivable came to a grinding halt last week. No unsecured credit is available to the company to pay on-going post-petition expenses. William C. Kosturos, Spiegel's Chief Restructuring Officer and Interim Chief Executive Officer, projects a net cash loss over the next 30-day period: The Spiegel Group Projected Cash Receipts & Disbursements For the 30-Day Period Following March 17, 2003 Cash Receipts $140,000,000 Cash Disbursements 226,000,000 ------------ Net Cash Loss $86,000,000 Mr. Kosturos also projects that unpaid post-petitions obligations will total about $10,000,000 a month from now and that Unpaid Receivables will total about $14,000,000. Against this backdrop, James L. Garrity, Jr., Esq., at Shearman & Sterling tells Judge Blackshear that Spiegel secured a new $400,000,000 super-priority senior secured debtor-in-possession financing agreement with Bank of America, N.A., Fleet Retail Finance, Inc., and The CIT Group/Business Credit, Inc. The Lenders under this new DIP Facility will hold administrative priority claims and first, senior and perfected security interests in, and liens on, and right of setoff against all of the Debtors' property (except the DFS Facility located at 6600 Alum Creek Drive in Grove Port, Ohio, that secures repayment of debts owed to Norddeutsche Landesbank Girozentrale and Deutsche Bank AG), pursuant to 11 U.S.C. Sec. 364, subject only to a $5,000,000 carve-out to allow for payment of the Debtors' and the Creditors' Committee's professionals, fees and expenses incurred Stephen J. Crimmins, the independent examiner appointed by the United States District Court for the Northern District of Illinois in United States Securities and Exchange Commission v. Spiegel, Inc., File No. 03 C 1685, and fees levied by the United States Trustee and the Court Clerk. The Debtors ask the Court to allow them access to $150,000,000 on an interim basis to fund projected cash shortfalls and honor obligations to customers, employees and critical vendors. The salient terms of the $400,000,000 Postpetition Financing package are: BORROWERS: Spiegel, Inc., Eddie Bauer, Inc., Spiegel Catalog, Inc., Ultimate Outlet Inc. And Newport News, Inc. GUARANTORS: Each Borrower provides a cross-guarantee and each of the other Debtors is a Guarantor of the Borrowers' obligations to repay to DIP Loans AGENT: Bank of America, N.A. LENDERS: Bank of America, N.A. Fleet Retail Finance Inc. The CIT Group/Business Credit, Inc. and additional lenders acceptable to the Agent COMMITMENTS: From the Petition Date through entry of a Final DIP Financing Order: Bank of America $50,000,000 Fleet 50,000,000 CIT 50,000,000 ------------ Total $150,000,000 From entry of a Final DIP Financing Order through the Consumer Credit Card Account Line Expiration Date: Bank of America, N.A. $133,333,333 Fleet Retail Finance Inc. 133,333,333 CIT 133,333,333 ------------ Total $400,000,000 On and after the Consumer Credit Card Account Line Expiration Date: Bank of America $116,666,667 Fleet 116,666,667 CIT 116,666,667 ------------ Total $350,000,000 SOLE LEAD ARRANGER AND BOOK MANAGER: Banc of America Securities, LLC. MATURITY DATE: March 17, 2005 INTERIM AVAILABILITY: Pending entry of a Final DIP Financing Order, the lesser of: (1) $150,000,000 and (2) up to the sum of (A) the lesser of (1) 50% of the aggregate amount of Eligible Inventory of the Borrowers and Eddie Bauer Canada, calculated at the lower of cost (on a FIFO basis) or market value and (2) 75% of the aggregate Orderly Liquidation Value of Eligible Inventory of the Borrowers and Eddie Bauer Canada and (B) the LC Inventory Availability at such time, minus the sum of (x) outstanding DIP Facility obligations and (y) reserves (if any) established by the Agent for interest obligations, the Carve-Out, claims against any Lender or the Agent under Section 506(c) of the Bankruptcy Code and other claims against any of the Borrowers that the Agent reasonably believes could have priority over the Obligations and all other Reserves the Agent thinks reasonable, including reserves for gift certificates, shrinkage, returns, markdowns and anything else. PERMANENT AVAILABILITY: Following entry of a Final DIP Financing Order, the lesser of: (1) $400,000,000 and (2) up to the sum of: (A) 85% of the aggregate Net Amount of Eligible Major Credit Card Receivables plus (B) the lesser of: (1) 65% of Eligible Inventory of the Borrowers and Eddie Bauer Canada calculated at the lower of cost (on a FIFO basis) or market value and (2) 85% of the aggregate Orderly Liquidation Value of Eligible Inventory of the Borrowers and Eddie Bauer Canada plus (C) the LC Inventory Availability -- which is 72.25% of the sum of the Orderly Liquidation Value of Eddie Bauer Inventory, and Newport Inventory in transit from foreign manufacturers whose claims are backed by Letters of Credit; plus (D) prior to approximately August 1, 2003, the least of: (1) 70% of the aggregate Net Amount of Eligible Consumer Credit Card Receivables (2) the sum of (x) 85% of the aggregate Net Liquidation Value of Eligible Consumer Credit Card Receivables and (y) the lesser of $45,000,000 50% of the quick sale value of the Debtors' Real Estate and (3) $50,000,000 less the aggregate amount of reductions (not to exceed $50,000,000) of the Lenders' Commitments; plus (E) after approximately August 1, 2003, the lesser of: (x) $15,000,000 less the aggregate amount of reductions of the Lenders' Commitments made under Section 4.2(b) that have not been applied to reduce the amount of clause (D)(3) above and (y) 50% of the quick sale value of the Debtors' Real Estate plus (F) during a 90-day period between July 1 and November 30 (the so-called Real Estate Seasonal Availability Period), the lesser of (x) $45,000,000 (for the Real Estate Seasonal Availability Period in 2004 and a lesser to be agreed upon) less the aggregate amount of reductions of the Commitments made under Section 4.2(b) that have not been applied to reduce the amount of clause (D)(3) above and (y) 50% of the quick sale value of the Debtors' Real Estate minus the sum of (x) outstanding DIP Facility obligations and (y) reserves (if any) established by the Agent for interest obligations, the Carve-Out, claims against any Lender or the Agent under Section 506(c) of the Bankruptcy Code and other claims against any of the Borrowers that the Agent reasonably believes could have priority over the Obligations and all other Reserves the Agent thinks reasonable, including reserves for gift certificates, shrinkage, returns, markdowns and anything else. LETTER OF CREDIT SUBFACILITY: $75,000,000 of the Interim Availability and $150,000,000 of the Permanent Availability is earmarked to back letters of credit. Documentary letters of credit may not be issued to finance the purchase of domestic inventory. USE OF PROCEEDS: To provide for ongoing working capital needs of the debtors in possession. INTEREST: Bank of America's prime rate plus 1.00% or, at the Borrower's option, LIBOR plus 3.00%. In the event of a default, the Interest Rate increases by 2.00%. FEES: The Debtors agree to pay a variety of fees: * an $8,000,000 Facility Fee; * an Unused Line Fee equal to 1/2 of 1% per year on each dollar not borrowed; * a one-time $150,000 Administration Feel * $750 per-person-per-day Field Examination Fees plus expenses; and * 3.00% Letter of Credit Fees. FINANCIAL COVENANTS: To be determined prior to the entry of the Final Order At the First Day Hearing yesterday, Judge Blackshear found that the Debtors make their case and the evidence demonstrates Spiegel's immediate need to put a new revolving credit and letter of credit facility in place to continue operating their businesses. Without such facility, Judge Blackshear finds, the Debtors will be unable to purchase new inventory and meet other day-to-day expenses, and will be unable to preserve their going concern values, and the likelihood of a successful reorganization will be greatly diminished. Absent approval of the Financing Agreement on an interim basis, the Debtors' operations will be seriously disrupted, resulting in immediate and irreparable harm to the estates. At first glance, Judge Blackshear finds that the terms and conditions are fair and reasonable under the circumstances. Accordingly, the Debtors have Bankruptcy Court authority, on an interim basis, pending a final hearing, to borrow up to $150,000,000 from the DIP Lenders ($75,000,000 of which is earmarked for letters of credit). The Final DIP Financing Hearing will be held on April 9, 2003 at 2:00 p.m. in Courtroom 601 at the United States Bankruptcy Court for the Southern District of New York in Manhattan. Responses and objections, if any, to the Debtors' request for final approval of the DIP Facility must be filed with the Clerk by 5:00 p.m. New York City time on April 4, 2003, and copies must be served on counsel for Debtors, the United States Trustee, and counsel to the DIP Lenders: Marc D. Rosenberg, Esq. Benjamin Mintz, Esq. Kaye Scholer LLP 425 Park Avenue New York, New York 10022 All of the Debtors' Post-Petition Obligations to the Agent and the Lenders shall have superpriority administrative expense status, in accordance with section 364(c)(1) of the Bankruptcy Code, over any and all other expenses and claims, subject only to the Carve-Out in the event of a default. *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: Professor Stuart Gilson's newest title, "Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups." List Price: $79.95 -- Discounted to $55.96 at http://amazon.com/exec/obidos/ASIN/0471405590/internetbankrupt -------------------------------------------------------------------------