Chelsey Direct LLC, the largest single investor in Hanover Direct Inc., has withdrawn its offer to purchase the company and take it private. As a result, Hanover, No. 73 in the Internet Retailer Top 500 Guide to Retail Web Sites, will continue as a public company.
Chelsey, which controls 91% of Hanover Direct’s voting rights, in March offered to acquire all outstanding common shares for $1.25 per share. But Chelsey on May 26 withdrew its offer and cited the company’s ongoing financial problems as the reason it rescinded the offer. "Due to the worsening operations of the company resulting from the matters as recently reported in the company's report for the first fiscal quarter, Chelsey has withdrawn its offer,” Hanover Direct says.
For the first quarter, Hanover Direct’s web sales totaled $38.7 million, an increase of 24% from web sales of $31.2 million the same period the previous year. But Hanover Direct also had a net loss of $1.8 million on sales of $100.3 million in Q1 2006 vs. net income of $3.2 million on sales of $89.7 million in Q1 2005.
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