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NYSE Moves to Delist Mossimo's Shares

Apparel: Stock will probably begin trading soon over the counter, says lawyer for troubled Irvine firm.

May 23, 2000|MARC BALLON | TIMES STAFF WRITER

The New York Stock Exchange, which halted trading in Mossimo Inc.'s stock Thursday, has moved to delist the company's shares, dealing another blow to the struggling apparel designer.

NYSE officials said they will apply to the Securities and Exchange Commission to delist Mossimo's shares, which no longer meet some of the NYSE's financial requirements, such as having a total market capitalization of at least $50 million.

The SEC almost always approves such recommendations, NYSE spokesman Ray Pellecchia said.

Mossimo's stock has lost nearly 90% of its value since the beginning of the year, sinking to 88 cents when trading was suspended.

The shares will temporarily resume trading today, providing a trading window while the company seeks to have its shares traded elsewhere. Trading will be suspended Friday before the Big Board opens, Pellecchia said.

Mossimo attorney Peter Gilhuly said the company's shares will probably begin trading soon over the counter. "After there's an involuntary bankruptcy, it's not surprising you would get a delisting," he said.

Trading was halted last week after a trio of Mossimo creditors filed a petition to force the Irvine company into bankruptcy liquidation. The company has until June 7 to contest the petition. Otherwise, it can proceed with liquidation or file for reorganization under Chapter 11 of the bankruptcy code.

Mossimo officials are talking to the creditors to seek a "consensual resolution," Gilhuly said. Attorneys for the manufacturers who filed the bankruptcy petition contend Mossimo owes their clients $650,000.

Gilhuly also said the company is talking to its lenders and exploring other financing options, an effort aimed at keeping its doors open long enough for its multimillion-dollar licensing deal with Target Stores to take effect. Under that agreement, Mossimo sportswear would be sold only in Target discount stores starting next year, bringing the company guaranteed royalties of about $27.8 million in the first three years.

"We are working to assure [Mossimo] survives," Gilhuly said.

The Target deal has sparked a massive restructuring at Mossimo, which said last week it intends to lay off 90% of its workers and close its South Coast Plaza boutique and an outlet store in Ontario.

Mossimo went public amid high expectations in early 1996. After being priced initially at $18, the stock peaked at $50 a share that June.

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