The Straits Times / The Business Times News on OSIM

Osim-led group cuts offer for Brookstone

Price cut to US$20 a share as US firm's results come in below expectations

THE Osim-led consortium has reduced its offer price for Nasdaq-listed Brookstone Inc to US$20 a share from US$20.50 after the weaker-than-expected financial performance of the American product developer and speciality retailer in the latest quarter.

In addition to the purchase price, the terms of financing for the acquisition have also been amended.

Forging alliance: Mr Sim (top) and Mr Anthony. Terms of financing for the acquisition have also been amended

According to an announcement by Brookstone on Friday, the terms of the financing commitment obtained by the consortium have been modified. Bridge financing will be available if the ratio of total adjusted debt to adjusted earnings before interest, tax, depreciation, amortisation and restructuring costs (Ebitdar) for the Brookstone business (excluding Gardeners Eden) is 5.94:1 or less on a latest twelve-months basis measured on the end of each month through August 31, 2005.

It is also conditional upon Brookstone having a minimum adjusted Ebitda equal to or exceeding US$45 million on a rolling latest twelve-months basis measured on the end of each month through Aug 31, 2005.

Based on current financial projections, Brookstone says it expects to be able to satisfy these conditions.

Besides Osim, others in the acquiring consortium are JW Childs Associates, a Boston-based private equity firm, and Temasek Holdings. And the financing is to be provided by Goldman, Sachs & Co, Bank of America, NA, UBS Loan Finance LLC and UBS Securities LLC.

On top of the amendments to the purchase price and terms of financing, the the termination date for the amended agreement and plan of merger has been moved up to Oct 5, 2005 from Oct 31, 2005.

Michael Anthony, chairman of the board, president and chief executive of Brookstone said: 'This transaction continues to offer great value to our stockholders. Due to weaker than expected financial performance, certain terms of the agreement and plan of merger had to be refined in order to obtain the requisite financing to complete the transaction.

'The change in financing terms and in the price per share has permitted the investor group to maintain committed financing with conditions that we believe will be satisfied based upon our current outlook for the business.'

Three weeks back, Osim said it was not deterred by Brookstone's announcement of an expected second-quarter loss of 20-22 cents a share before any items and of the planned sale of its gardening products division.

Osim's founder and chief executive Ron Sim told BT then: 'We are still pretty bullish on the company because the US lifestyle gifts business always concentrates on the last quarter.'

On Friday, Brookstone shares last traded at US$19.50. It was traded at around US$15 before Osim's deal was announced in April.

For the second quarter ending July 30, 2005, Brookstone is now anticipating a loss of between US$0.16 and US$0.19 per fully diluted share including the Gardeners Eden business but exclusive of charges related to the planned Gardeners Eden divestiture.