Debt-Ridden Ocean Pacific Faces Mounting Pressure to Take Buyout : Chapter 11: Surf wear firm is, however, granted more time by bankruptcy court to fine-tune its own reorganization plan.
At least two investment groups are showing interest in buying out Ocean Pacific Sunwear Ltd., and pressure is mounting on its owners to accept an offer.
While the small group that owns OP has spurned such proposals in the past, the partners may be more inclined to accept now. The company’s two secured creditors, Wells Fargo Bank and Republic Factors Corp. in Los Angeles, have started court proceedings to attach the partners’ personal assets.
“It puts a lot of pressure on them, no doubt about it,” said Mike Balmages, OP’s senior executive vice president.
The proposals were disclosed in U.S. Bankruptcy Court at a hearing Thursday in which Ocean Pacific requested time to fine-tune the reorganization plan that it filed Sept. 21.
OP, the world’s most prolific licenser of surf wear, is trying to bounce back after filing in May for protection under Chapter 11 of the U.S. Bankruptcy Code. At that time, OP said it owed $2.1 million to Wells Fargo, $4.7 million to Republic Factors and $4 million to unsecured creditors.
The company’s reorganization plan calls for eventually paying off all debt. But lawyers for some of the creditors said in court Thursday that their clients want to offer alternative proposals now.
Two such plans were disclosed, and lawyers indicated that other companies might be interested as well. Argyropolous-Apollo Group, which three years ago offered $30 million in cash and millions more in other consideration for OP, has come up with a proposal under which it would take over the surf wear company and pay creditors $3 million at the outset. Another investment group, Berkeley International Capital Corp., may make a similar cash-up-front offer, lawyers said.
But the takeover plans did not impress Judge James N. Barr, who granted OP’s request for more time to see how its own reorganization proposal works out. Barr said he feared that the bankruptcy court process could be manipulated by companies wanting to take over OP.
“This court is not to be used for the takeover process,” he said.
MORE O.C. BUSINESS: D5
