Goody’s goes private with completion of tender offer

KNOXVILLE, Tenn. Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. — A $327 million tender offer for Goody’s Family Clothing Inc. was completed Tuesday as two New York investment firms announced they had enough shares to put the 381-store chain back in private hands.

Robert Goodfriend, chairman, director and CEO, will resign from the Knoxville-based company founded by his father as an outlet store in Athens, Tenn., in 1953.

Goodfriend, who appeared in commercials for the company he renamed Goody’s in 1991 when it went public, hasn’t said what his future holds.

Isaac Dabah, a principal with GMM Capital, one of the acquiring firms, will succeed him as director and chairman. Also joining the board will be Michael Zimmerman of Prentice Capital Management, the other acquiring company.

Prentice Capital Management and GMM Capital said shareholders controlling 95.4 percent of Goody’s 34.1 million shares accepted their $9.60-a-share cash offer. Among those was Goodfriend, whose family held a 42 percent stake in the company.

“I am pleased that this transaction was completed and that excellent value has been delivered to our shareholders,” Goodfriend said in a statement.

Goody’s, a moderately priced clothing retailer with stores in 21 states throughout the South and Midwest, became the subject of a bidding war in October despite flagging financial results.

Sun Capital Partners of Florida opened the door with an $8-a-share offer, then backed out when Prentice Capital and GMM Capital sweetened the bid for a company that had 2004 sales of $1.2 billion but last month reported a $23.4 million third-quarter loss.

“We haven’t heard anything about any changes yet, or if there will be any” besides Goodfriend’s departure, Goody’s spokeswoman Kristin Macht said. “As far as business or future endeavors, he really hasn’t said (what he will do).”

In his statement, Goodfriend said Prentice Capital and GMM Capital are “fine organizations with proven track records, and I am confident we are leaving our franchise in good hands.”

Prentice Capital Management recently acquired KB Toys Inc., the financially troubled Massachusetts-based toy store chain, and provided restructuring financing to Whitehall Jewellers Inc. of Chicago. GMM Capital at one time owned Gloria Vanderbilt jeans.

“We are excited to have completed the first step in our acquisition of Goody’s,” Zimmerman said in a statement. “We look forward to working with the customers, associates and suppliers of Goody’s in building upon the rich Goody’s history and tradition.”

Goody’s has about 11,000 employees.