Fashion Channel Needs Quick Cash Infusion to Go On

Fashion Channel Network, the beleaguered Carson-based venture selling clothing, cosmetics and accessories over cable channels, said Thursday that it is close to ceasing operations because of a lack of cash.

The company, which began its shop-at-home vending last October, said it is “experiencing severe liquidity problems,” and it reiterated an April statement that it needs an immediate infusion of funds. It said it has had discussions with a number of parties since March but has not yet reached an agreement.

If such an agreement does not come “within a short time . . . the company will not be able to continue to operate its business or discharge its obligations,” the company’s statement said.

Should the company liquidate, management said assets would probably be sold for substantially less than their current book value of about $10.4 million. The company’s liabilities exceed $15.6 million.

Larry Gerbrandt, an analyst with Paul Kagan Associates in Carmel, Calif., who follows the home-shopping industry, said negotiations with Shop Television Network, a venture backed by J. C. Penney and STN of Hollywood, that were to have resulted in an infusion of $6 million apparently have “reached an impasse.” A Fashion Channel spokesman would not comment on speculation that Shop at Home, a Tennessee company, is a suitor.

For the year ended April 30, Fashion Channel reported a loss of $18.5 million, slightly lower than previous estimates of nearly $20 million. Sales were $5.5 million. For the year’s last quarter, the loss was $5.25 million on revenue of $5.21 million.

The biggest investors in Fashion Channel are Tele-Communications Inc. and its affiliated United Cable Network, Denver-based firms that control 44% of the young company. Officials at TCI could not be reached, and a United Cable spokeswoman said the company would not comment.

Fashion Channel went public in a $20-million offering last October that supplied most of its start-up capital.