EXHIBIT 1
ANNTAYLOR
NEWS RELEASE
142 WEST 57TH STREET NEW YORK, N.Y. 10019
FOR IMMEDIATE RELEASE
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ANN TAYLOR TO ACQUIRE CYGNE DESIGN'S INTEREST
IN CAT SOURCING JOINT VENTURE;
ANN TAYLOR ALSO ANNOUNCES PROPOSED
$75 MILLION FINANCING TRANSACTION
New York, New York, April 8, 1996 -- AnnTaylor Stores Corporation (NYSE:
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ANN) announced today that it has entered into an agreement in principle with
Cygne Designs, Inc. ("Cygne"), pursuant to which Ann Taylor will acquire Cygne's
entire interest in the Company's direct sourcing joint venture with Cygne known
as CAT U.S., Inc. and C.A.T. (Far East) Limited (together, "CAT"). Pursuant to
the agreement, Ann Taylor will also acquire the assets and assume certain
liabilities of what is known as the Ann Taylor Woven Division of Cygne, which is
the division of Cygne that is responsible for sourcing merchandise for Ann
Taylor. In fiscal 1995, Ann Taylor purchased approximately 38% of its
merchandise through CAT and an additional 16% of its merchandise directly from
Cygne.
The Ann Taylor Woven Division of Cygne includes approximately 65 employees
in New York as well as a smaller number of employees in foreign offices in Hong
Kong and Italy. The Company said that it intends to integrate the operations of
the Ann Taylor Woven Division with the operations of CAT, so that following the
acquisition, CAT will be a wholly owned subsidiary of Ann Taylor, responsible
both for the sourcing functions CAT currently performs for Ann Taylor and for
all of the sourcing functions for Ann Taylor currently performed by Cygne. The
Company said that the expanded CAT operation will continue to be led by CAT's
current President, Dwight Meyer.
The purchase price for Cygne's interest in CAT and the Ann Taylor Woven
Division assets will consist of shares of Ann Taylor common stock having a
market value of $36 million at the time of closing (provided that in no event
will Ann Taylor be required to issue more than 2.5 million shares) plus a cash
payment in an amount equal to the tangible net book value of the inventory and
fixed assets of the Ann Taylor Woven Division, less certain assumed liabilities
of the Division, plus an amount in respect of an obligation under an existing
employment agreement with CAT. At fiscal year end 1995, the total of such cash
payments would have been approximately $14.9 million.
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Ann Taylor's Chairman and Chief Executive Officer, Sally Frame Kasaks,
said, "The acquisition of CAT and the Ann Taylor Woven Division of Cygne is an
important step in furthering our strategy of improving our merchandise offerings
by more closely integrating the processes of design, planning, merchandising and
sourcing. By combining CAT and the Woven Division of Cygne, we will be able to
leverage the respective strengths of each organization. The acquisition will
give us greater control over pre-production processes and production management,
which we believe will result in a variety of operational benefits."
The closing of the CAT/Cygne transaction is subject to various conditions,
including (i) negotiation and execution of a definitive acquisition agreement
and related documentation, (ii) the approval of the transaction by Cygne's
stockholders, (iii) the consent and release of liens by each of HongKong and
Shanghai Banking Corporation and certain other lenders to Cygne, (iv) the
continuation of CAT's existing $40 million credit facility by HongKong and
Shanghai Banking Corporation, its current lender, (v) receipt by Cygne of a
fairness opinion from its financial advisor, (vi) the consent of Ann Taylor's
lenders under its bank credit agreement and (vii) the consummation of the
offering by AnnTaylor Finance Trust of the convertible securities described
below. It is currently anticipated that the transaction will close in July 1996
following approval by Cygne's stockholders. There can be no assurance that
definitive documentation will be completed or any other conditions will be
satisfied, or that the transaction will be consummated.
Ann Taylor has agreed to register the shares to be issued to Cygne for
resale, although Cygne will be subject to certain restrictions on the timing of
sales (including the limitation that the shares will not be transferable until
30 days after the expiration of the lock-up period applicable to the financing
described below) and the amount of shares which can be sold at any one time.
The Company also announced today that it is seeking to raise $75 million
through the sale of convertible preferred securities to be issued by a financing
vehicle to be known as AnnTaylor Finance Trust, a Delaware business trust (the
"Trust"). The Trust will offer for sale convertible trust originated preferred
securities ("Convertible TOPrS") of the Trust, having an aggregate liquidation
preference of $75 million (with an option to purchase an additional $11.25
million of such securities to cover over-allotments). These securities will be
convertible at the option of the holders thereof into Ann Taylor common stock.
The convertible preferred securities will not be registered or required to
be registered under the Securities Act of 1933 and will be sold in the United
States and outside the United States in a private placement under Rule 144A and
Regulation S, respectively, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
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The Company plans to use the proceeds of the financing to reduce borrowings
outstanding under the Company's revolving credit facility, without reduction of
the commitments thereunder. If the CAT/Cygne transaction is consummated, the
Company may re-borrow funds under the revolving credit facility to fund the net
tangible assets payment provided for under the agreement and related payments
and expenses of the acquisition. Consummation of the financing is subject to
market and other conditions, and there can be no assurance that the offering of
preferred securities will be consummated.
Ann Taylor is one of the country's leading women's specialty apparel
retailers, operating 308 stores in 40 states and the District of Columbia.
Contact: Jocelyn Barandiaran Gina Iaderosa
Investor Relations Marketing/Public Relations
212-541-3226 212-541-3347
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