Lenox to consider possible sale, adopts shareholder rights plan

By Lisa Kerner

Charlotte, N.C., Jan. 14 - Lenox Group Inc. will explore strategic alternatives to enhance shareholder value, including a possible sale of the company, in a process expected to take six months.

The company said it has been approached by "several parties who have expressed an interest in recapitalizing, combining with or acquiring Lenox or parts of Lenox."

In addition, the company's board of directors adopted a stockholder rights plan "designed to reduce the likelihood that a potential acquirer would gain control of Lenox by open market accumulation or other coercive takeover tactics without paying a premium for the company's shares," a company news release stated.

Under the rights plan, one right will be distributed for each share of Lenox common stock outstanding at the close of business on Jan. 28. Owning 15% or more of Lenox's outstanding shares will trigger "substantial dilution" to the owners. Current owners of 15% or more of Lenox common stock will not trigger the rights plan until additional shares are acquired.

In addition, the rights plan provides that the exercise of rights will not be triggered by a qualifying offer if holders of at least 10% of shares outstanding request a special meeting where holders of a majority of shares vote to redeem all of the outstanding rights.

The rights plan is in effect until Jan. 14, 2011.

Lenox also announced the resignation of board member Cesar A. Baez and that the company is finalizing its financials for fiscal 2007. Complete audited results are expected to be filed in a 10-K on or about March 13.

With Baez's resignation, the agreement between Lenox and Clinton Group, Inc. expired, including Clinton Group's obligation under that agreement to not exceed an 18% ownership interest in Lenox.

"While our financial and operational performance and working capital has been improving, we continue to face challenging business and economic conditions," interim chief executive officer Marc Pfefferle said in the release.

"We have made progress in reducing inventory levels and working capital requirements and are pleased to announce today that Lenox Group Inc. ended fiscal 2007 with $66.9 million of borrowing availability under its revolving loan agreement. This compares favorably to the company's borrowing availability of $47.6 million at the end of fiscal 2006 and the 2007 year-end budget of $48.4 million," Pfefferle added.

Lenox said sales in 2007 are expected to be lower than budgeted, and the company remains concerned about the economy and retail environment in fiscal 2008.

Eden Prairie, Minn.-based Lenox is a gifts and collectibles distributor.

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