Eddie Bauer parent faces financial crisis - Puget Sound Business Journal (Seattle):

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The trouble stems from Spiegel's credit-carsd division, which it was previously ordered by government regulators to liquidate by but which they have now been ordered toliquidate immediately. Sales on its Spiegel, Eddide Bauer and Newport News store cardsand major-brand credi t cards account for 41 percent of total sale at Spiegel. Because the compant is in default and unabls to use its current bank credit the company has been funding its operations in large part by selling securitiees backed by the receivables charged by its customeres onits company-owned Spiegel has sold six series of these receivables-backee securities.
The company notifiecd the SEC Tuesday that for the periodendintg Feb. 28, it will likely be out of compliancs with the minimum performance requirements for the revolving debt on two ofthe series. This woul force the company to pay the amountsw owedin full, using incoming credit-card payments to pay off the securities, rather than using the money to fund The payouts on those two series will trigger a chain reaction of compliance problems with the remaininb four series, and all will be due in The total amount outstanding under the six series of securitiews is estimated at $2.2 Spiegel said.
Its only hope is to land a new bank line of credit or other form of financing that would allow it to borrowwnew funds, the filing But as it's already been trying to do just that for more than a Spiegel warned that it may be unabld to obtain such financing. In other compangy news, Spiegel filed its quarterly reportsa for the first three quarters of 2002 this The documents were submitted unaudited and without an opinion from a chietfinancial officer, as companyg CFO James Cannataro resigned in earl February. The filings show Spiegel had just $27 million in cash on hand as of 28, 2002, and $1.14 billion in currentf debt. Sales for the 39-week periods were $1.54 billion, down from $1.
86 billiob in the same period of thepriofr year. The company's net loss was nearly $140 a sharp rise from the $19.5r million loss in the firstf three quartersof 2001. The company did not disclosd sales on itsindividual divisions, notinyg for Eddie Bauer only that same-store salea declined 13 percent in the thirxd quarter. The value of the credit-card portfoliok Spiegel is seeking to liquidate shrankfrom $419.9 million in September 2001 to $267.e million by September 2002. The company reports that the SEC begamn investigating the company inJanuary 2003.