The mainland T-shirt company with a panting St. Bernard as its logo is moving to buy the assets of Crazy Shirts Inc. out of bankruptcy for $10 million, less than half of the company's debt. California company
to buy Crazy ShirtsBy Tim Ruel
truel@starbulletin.comBig Dog Holdings Inc., based in Santa Barbara, Calif., said it plans to keep the Crazy Shirts brand alive under a subsidiary. Big Dog will also begin a review of operations to trim red ink. Closing any of the chain's stores could be an option, but the firm said it will try to keep most employees. "Basically, it's been a distressed company," said Tony Wall, executive vice president and general counsel for Big Dog.
"They are a strategic buyer," said Randy Yeager, Crazy Shirts president and co-chairman. Yeager had previously stepped down from Crazy Shirts, and returned again last year with a new board of directors to help the company out of its financial troubles. Yeager was offered a job with the new firm, but said he will not take it.
Hawaii philanthropist Rick Ralston founded Crazy Shirts in Waikiki in 1964.
Crazy Shirts filed Chapter 11 reorganization bankruptcy yesterday in Hawaii, in keeping with its deal with Big Dog. Crazy Shirts failed to produce a profit in the fiscal year that ended in February, according to a statement issued by Big Dog. Crazy Shirts has struggled to make money since 1997, when falling sales to Hawaii's Asian tourists led the company to slash operations, close stores and briefly move headquarters to California from Honolulu.
Ralston Enterprises Inc. once employed 1,000 people and had more than $80 million in revenues, according to an annual survey by Hawaii Business Magazine. Ralston has since shed much of his assets. Crazy Shirts finished this year in February with $47.7 million in revenue. The company has 44 stores and 533 employees, 300 of whom are in Hawaii.
Big Dog said it wants to acquire all the assets of Crazy Shirts -- valued about $10 million -- but none of the debts.
Crazy Shirts has more than 1,000 creditors, mostly vendors and lenders. The total debt is roughly $24 million. The Bank of Hawaii is the largest creditor, owed $12.9 million in secured and unsecured debt. That debt will not be covered, Yeager said. The bank is also owed a senior core debt of $3.3 million, which will be covered.
The bank provided $38 million to Crazy Shirts in 1994 to finance conversion of the former Aiea sugar mill into a historical manufacturing and sales center. The deal quickly turned sour, however, and Bankoh took the property back this year to release Crazy Shirts from a portion of the loan. A Bank of Hawaii spokeswoman declined comment.
Crazy Shirts filed bankruptcy primarily to smooth its sale to Big Dog, Yeager said. Among Crazy Shirts' assets are three warehousing facilities, four distribution channels and wholesale deals with DFS Group Ltd. and Starboard Cruise Services.
Big Dog's intent is to keep as many people as possible, Yeager said, though he noted that certain duplicated back-office positions would be eliminated in a sale, such as in accounting and information systems.
In Hawaii, Big Dog has one retail outlet at Waikele and closed one in the Dole Cannery in the past couple of years.