Strouds names interim ceo

By Andrea Lillo -- Home Textiles Today, 3/17/2003 9:00:00 AM

Portland, OR — A turnaround specialist was named interim ceo at Strouds last week, only days after an investment company based here, Fog Cutter Capital Group, bought a controlling interest in the company.

Susan Storey, who will take on the day-to-day operations of the company, is a managing director at Nightingale Associates, a turnaround company based in Stamford, CT, with offices in San Francisco.

Her 20 years in the financial and operational restructuring business includes structured debt and equity financing, cash-flow management, asset disposition and recovery and liquidation, according to her company. She has previously acted as ceo and cfo in turnaround situations, according to Nightingale.

Her background includes work with companies in such industries as knitwear, textile and furniture manufacturing and retail as well as aviation, aerospace services and heavy equipment manufacturing.

In the meantime, Rob Valone remains president of Strouds, based in City of Industry, CA, and a search for a permanent ceo is under way.

Storey's appointment comes a month after the troubled retailer averted bankruptcy by voluntarily restructuring its trade debt, which freed additional resources from its secured lenders and then principal investor, Walter Cruttenden III, Strouds' chairman. It also marks a week since Fog Cutter Capital Group acquired a 49.5 percent interest in the retailer and a majority of the board of directors. The transaction, which includes additional funds from Cruttenden, will be a two-stage infusion of working capital and the reinstatement of a $35 million inventory line-of-credit with Fleet Retail Finance. The investment was made through a combination of secured debt, stock warrants and preferred stock.

"Due to the troubled U.S. economy, we believe that the timing of this investment is strategic in the retail sector," said Andrew Wiederhorn, chairman and ceo, Fog Cutter. "It is very similar to other strategic positions that we have taken in the retail real estate market. This new capital investment in Strouds positions the linen retailer to solidly weather the current turbulence in the retail sector and emerge on strong and stable footing."

Fog Cutter's investment activities focus on five areas: real estate investment, commercial real estate financing, mortgage-backed securities trading, non-performing loan acquisitions, and merchant banking. In the fourth quarter 2002, the company acquired the leasehold interests in 109 freestanding retail stores nationwide, sublet to a broad tenant mix including convenience stores, shoe stores, video rental outlets, car part dealers, carpet retailers and other small businesses.

"We are pleased to have Fog Cutter join us in our efforts to make Strouds the premier linen retailer for our customers," said Cruttenden. "We believe that this transaction puts us on solid footing to build our market share and enhance our operations." He declined to disclose additional details about the transaction.