Federated Department Stores Inc. is looking for more bids for Fingerhut, and is now willing to sell the catalog’s assets in pieces. Also, the catalog’s parent said it will lay off 3,300 workers by April 5, and set a date to close the company.
Earlier this week, Peter Lytle, who had signed a letter of intent to purchase Fingherhut Cos., told the Minneapolis Star Tribune that financing was in place, and that a deal could be finalized in the near future.
But Federated said today that although progress has been made in its talks with Lytle’s firm, Business Development Group, enough uncertainty exists about a sale going through that it “will begin to explore potential transactions with third parties.”
Business Development Group, Wayzata, MN, had signed a letter of intent in mid-February to purchase all the Fingerhut companies as one entire entity. The statement said that although talks would continue with Peter Lytle who heads up Business Development Group, the company would entertain bids from “parties interested in purchasing individual Fingerhut assets.”
Those assets include catalog subsidiaries Arizona Mail Order, Figi’s and Popular Club, which are expected to be sold as going concerns.
Two of the potential bidders still in the running include Tom Petters, owner of Minnesota companies, Petters Cos. and Redtag Inc., and Ted Deikel, former Fingerhut CEO.
Talks continue with Business Development Group, Cincinnati-based Federated confirmed.
“We will continue working with them,” said Carol Sanger, Federated spokesperson. “This is a good relationship. But after five weeks, we need to not keep our eggs in one basket.”
Next week, employees who had received federally mandated notices will be told they are being terminated on April 5.
A memo to employees from Fingerhut CEO Michael Sherman said that the firm will also be “finalizing the last date of operation for the Fingerhut catalog itself.”
The 3,300 to be laid off include all of the 1,300 employees in Tennessee, as the Tennessee facility closes, and 2,000 in St. Cloud and Minnetonka.
“We are willing to offer severence benefits to [union] members that are in excess of those provided for in existing contracts,” said Ronald W. Tysoe, Federated vice chairman, in the statement.
Federated’s decision will end employees’ uncertainty, said Ben Saukko, Fingerhut spokesperson. Further delaying a sale will also devalue the assets, including inventory, Saukko added.
“Federated said all along that it’s unlikely that a buyer would be found,” Saukko said. “Personally, it’s disappointing.”
Federated announced on Jan. 16 that it would liquidate Fingerhut unless a buyer could be found.
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