Higgins moves forward with plans to take Trans World private
By Susanne Ault -- Video Business, 12/18/2007
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DEC. 18 | Despite some shareholders protesting the deal terms, Trans World CEO Robert Higgins is moving ahead on his bid to take the retail chain private.
Higgins and Riley Investment Management have jointly formed an acquisition entity, named Venture LLC, for the purpose of purchasing all outstanding shares of Trans World. Last month, Higgins, considered Trans World’s largest shareholder with 40% control, reached out to Riley as a potential co-investor in his proposal. Higgins and his associates want to pay $5 per share for the outstanding Trans World stock they do not already own.
Currently, Riley holds 11.9% of Trans World stock.
Enacted on Nov. 28 and filed with the Securities and Exchange Commission on Dec. 10, Venture LLC will comprise 12 million shares of Trans World stock contributed by Higgins and between 3.5 million and 5.5 million contributed by Riley. Both Higgins and Riley reaffirmed their decision to purchase outstanding stock for $5 a share.
On Nov. 29, Trans World shareholder Sherwood Investments Overseas Limited told the chain’s special committee that it would be willing to pay $7 per share for all outstanding stock, representing a significant premium over Higgins’ and Riley’s deal. Earlier in the month, Sherwood had expressed displeasure with the CEO’s plans to the special committee, formed from Trans World’s board of directors to analyze all strategic options for the chain.
In a letter to the special committee, Sherwood wrote that the $5 per share price is “grossly inadequate” and urged the group to seek competing bids for the company.
By Dec. 13, Sherwood commanded 6.31% of Trans World stock, comprising nearly 2 million shares. Through November, Sherwood has been bulking up its ownership stake by purchasing tens of thousands of Trans World shares. Just several weeks ago, as of Nov. 16, Sherwood owned 1.35 million shares.
Shareholders should not accept $5 per share, argues Sherwood, because pure liquidation of Trans World assets would generate proceeds in excess of $8 per share.
“Sherwood Investments Overseas Limited is pleased to offer $7 per share for all of the shares of Trans World Entertainment not currently owned by Sherwood,” the letter stated. “This offer may be increased as a result of the due diligence process.”
No timetable has been specified regarding the special committee’s final decisions about the rival plans of Higgins and Sherwood.