House of Fabrics Trading Suspended

The New York Stock Exchange on Tuesday suspended trading in House of Fabrics Inc. and said it would apply to the Securities and Exchange Commission to delist the stock of the Sherman Oaks retail chain.

The exchange said it was taking the action because House of Fabrics’ net tangible assets and three-year average net income fell below the minimum levels required for continued listing. It also cited the company’s Chapter 11 bankruptcy filing.

Gary L. Larkins, House of Fabrics’ chief executive, said he was “disappointed by the action and the timing” of the exchange’s announcement. He called the move to delist the stock “inappropriate” given that the company filed its first plan of reorganization in August. Also, he said, there has been “no material change” in the financial criteria cited by the exchange in the past nine months.

The company said it is pursuing discussions with the exchange as well as seeking alternative listing opportunities.

House of Fabrics filed for bankruptcy protection in November 1994 after the sluggish retail environment, fierce competition and an ill-timed expansion led to financial troubles at the 50-year-old chain.

On Thursday, the company said it had secured a $60-million revolving line of credit. House of Fabrics said the three-year credit line from CIT Group, effective at the end of July, was a final step in its restructuring, allowing it to emerge as a much smaller company, but with less debt.

Since January, the number of stores in the House of Fabrics chain has been reduced from 361 to 269, and more than 1,000 employees have been laid off. Before the Chapter 11 filing, the company operated 624 stores.

Also last week, the company received court approval for its reorganization plan, allowing it to begin soliciting approval from its creditors and shareholders starting today.

According to the plan, House of Fabrics’ secured creditors will receive $75.5 million in cash, plus 5% of the common stock of the reorganized company. Unsecured creditors are to receive between $100 million and $120 million, as well as 93% of the common stock. Existing equity holders will get the remaining 2% of the stock and warrants to purchase up to an additional 15% of the shares of common stock.

House of Fabrics’ stock last traded Thursday, when it closed at 68.75 cents a share.