-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SzCt2eoS9vCBm7BEYxSfkN61/cjJEIRsL1x5SjsLmNcR+X+RPL/5meMsnGi5CVYG JQtWYvG0zhObWemcFwIglg== 0000950123-04-004195.txt : 20040402 0000950123-04-004195.hdr.sgml : 20040402 20040402170829 ACCESSION NUMBER: 0000950123-04-004195 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040322 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANOVER DIRECT INC CENTRAL INDEX KEY: 0000320333 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 138053260 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08056 FILM NUMBER: 04714824 BUSINESS ADDRESS: STREET 1: 1500 HARBOR BLVD CITY: WEEHAWKEN STATE: NJ ZIP: 07087 BUSINESS PHONE: 2018653800 MAIL ADDRESS: STREET 1: 1500 HARBOR BLVD CITY: WEEHAWKEN STATE: NJ ZIP: 07087 FORMER COMPANY: FORMER CONFORMED NAME: HORN & HARDART CO /NV/ DATE OF NAME CHANGE: 19920703 8-K 1 y95414k3e8vk.txt FORM 8-K 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 22, 2004 ------------------------ HANOVER DIRECT, INC. ------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 1-12082 ---------------------------------- (COMMISSION FILE NUMBER) DELAWARE 13-0853260 ----------------------------------- ---------------------------- (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NUMBER) 115 RIVER ROAD EDGEWATER, NEW JERSEY 07020 ---------------------------------- -------------- (ADDRESS OF PRINCIPAL (ZIP CODE) EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 863-7300 ------------------- ------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ITEM 5. OTHER EVENTS. On March 22, 2004, Hanover Direct, Inc. (the "Company") sent a letter to Chelsey Direct, LLC ("Chelsey"), a copy of which is filed as Exhibit 99.1 hereto. Chelsey rejected the proposal set forth in the letter. On April 2, 2004, the Company sent a letter to Chelsey, a copy of which is filed as Exhibit 99.2 hereto. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. Exhibit 99.1 - Letter dated March 22, 2004 from Hanover Direct, Inc. to Chelsey Direct, LLC. Exhibit 99.2 - Letter dated April 2, 2004 from Hanover Direct, Inc. to Chelsey Direct, LLC. 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 hereunto duly authorized. HANOVER DIRECT, INC. --------------------------------------- (Registrant) April 2, 2004 By: /s/ Charles E. Blue --------------------------------------- Name: Charles E. Blue Title: Senior Vice President and Chief Financial Officer EX-99.1 3 y95414k3exv99w1.txt LETTER Exhibit 99.1 Hanover Direct 201 272 3106 Fax 201 272 3465 March 22, 2004 BY FACSIMILE AND/OR E-MAIL Mr. Stuart Feldman Chelsey Capital 712 Fifth Avenue, 45th Floor New York, New York 10019 William B. Wachtel, Esq. Wachtel & Masyr, LLP 110 East 59th Street New York, New York 10022 Gentlemen: In response to the expressed desire of Chelsey Direct, LLC to exit its investment in Hanover Direct, Inc. (the "Company"), it is my pleasure to convey the following proposal on behalf of the Company, its Transactions Committee and a majority of the independent members of the Company's Board of Directors. As you know, the Company is in discussions with several major financial institutions to provide senior and subordinated financing to the Company. The Company is also in conversations with third parties with respect to a sale-leaseback of its principal warehouse and distribution center. Additionally, the Company contemplates selling non-core assets. The Company believes that it will successfully consummate a transaction with a senior lender, a sale-leaseback and the other aforementioned asset sales within the next 45 days and offers to utilize $45 million of the proceeds of these transactions to fully purchase and retire all of the Company's Series C Preferred Stock and common stock owned by Chelsey Direct, LLC. We believe this offer is fair to Chelsey for several reasons. As you are both aware, the fully accreted value of the Company's Series C Preferred Stock will be $72.7 million in 2009. Applying a 13% hurdle rate to this future value yields a NPV of approximately $36 million. The hurdle rate applied is equal to the interest rate Chelsey was willing to take when it recently agreed to provide short-term financing to the Company which, as you know, the Company has now been able to fulfill through its internal operations. The remaining $9 million of the Company's proposal of value could be attributable to Chelsey's common shares to which it has publicly ascribed only option value. Our proposal is subject to completion of these various transactions, the execution of definitive agreements with you, the final approval of the Audit Committee, the Transactions Committee and the Board of Directors of the Company and the consent of the Company's lender. The Company would like to enter into an agreement in principle on the proposed share repurchase with Chelsey Direct as soon as possible containing the terms outlined above. The Company believes that these financing transactions and dispositions of non-core assets and the purchase and retirement of Chelsey Direct's entire equity position will produce a fair and reasonable outcome for the Company's creditors, common shareholders and Chelsey Direct. The Company and a majority of its independent directors are firmly committed to effecting the outcome outlined in this proposal and look forward to working with Chelsey Direct in its consummation. I look forward to our continued dialogue and progress in this endeavor. Sincerely, /s/ Tom Shull Tom Shull cc: Board of Directors Sarah Hewitt, Esq. EX-99.2 4 y95414k3exv99w2.txt LETTER Exhibit 99.2 Hanover Direct 201 272 3106 Fax 201 272 3465 April 2, 2004 BY FACSIMILE AND/OR E-MAIL - -------------------------- Mr. Stuart Feldman Chelsey Capital 712 Fifth Avenue, 45th Floor New York, New York 10019 William B. Wachtel, Esq. Wachtel & Masyr, LLP 110 East 59th Street New York, New York 10022 Gentlemen: I understand that Chelsey Direct, LLC ("Chelsey") has misunderstood the value ascribed to the securities of the Company owned by Chelsey in the proposal made on March 22, 2004 to Chelsey that was subsequently rejected. Please be advised that the proposal of March 22nd was intended to be a bundled proposal with no specific allocation of the proposed price between the classes of securities owned by Chelsey meant to be suggested or implied. The example used in the letter merely applies the minimum interest rate charged in the Company's existing Tranche B Term Loan Facility and matched by Chelsey in a proposed loan by the Chelsey to the Company. Neither any senior member of management nor any of the directors who have not been designated by Chelsey believes that the Company's common shares are worth less than their trading price. Any suggestion to the contrary is simply incorrect. The proposed price for Chelsey's securities was felt to be a fair price at which to begin negotiations and was intended to be responsive to the good faith belief shared by those present before, during and after the February 12th Board meeting that Chelsey wanted to entertain offers for its securities which we now understand may not be the case. Sincerely, /s/Tom Shull Tom Shull cc: Board of Directors Sarah Hewitt, Esq. -----END PRIVACY-ENHANCED MESSAGE-----