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EXHIBIT 20.1
NEWS RELEASE
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FOR IMMEDIATE RELEASE
DECEMBER 9, 1997
STAGE II APPAREL SIGNS AGREEMENT FOR
ACQUISITION OF SHOREBREAK GROUP
NEW YORK, NEW YORK -- STAGE II APPAREL CORP. (AMEX: SA) announced an
agreement (the "Purchase Agreement") with Shorebreak Group, Inc. ("Shorebreak")
and its shareholders (the "Shorebreak Shareholders"), providing for the
Company's acquisition of Shorebreak and related transactions. Completion of the
transactions will be subject to approval by the Company's shareholders, receipt
of a fairness opinion and various other closing conditions.
The transactions contemplated by the Purchase Agreement include (i) the
Company's repurchase of 1,900,000 million shares of its common stock ("SA
Common") held by Xxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxxxx X. Xxxxx, officers and
directors of the Company, in consideration for their release from guarantees of
the Company's indebtedness to its factor and their receipt of options to
purchase a total of 1,500,000 shares of SA Common at exercise prices ranging
from $.50 to $1.75 per share, (ii) the Company's acquisition of all the
outstanding capital stock of Shorebreak in exchange for 4,008,654 newly issued
shares of SA Common to be issued to the Shorebreak Shareholders, constituting
two-thirds of the SA Common to be outstanding upon the closing of the
transactions, (iii) the reconstitution of the Company's board of directors with
designees of Shorebreak and (iv) the addition of a new management team to be
headed by Xxxxxxx Xxxxxxx, the principal shareholder and chief executive officer
of Shorebreak. The Purchase Agreement also contemplates that a new factoring
agreement will be arranged for the Company by the Shorebreak Shareholders.
Xxxx Xxxxx, Chairman of Stage II, said "We explored a number of
alternatives to address the company's growth potential, capital availability and
management needs. We have great confidence in Shorebreak's talented management
team and believe this is the best available transaction for the Company and its
shareholders."
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Upon closing, Xxxxxxx Xxxxxxx will become Chairman and CEO of Stage II.
Xx. Xxxxxxx is the principal shareholder and CEO of Shorebreak as well as
segments of the apparel industry, in which he has over 30 years' experience.
Shorebreak is a distributor men's and boy's sportswear under licensed brand
names. From its inception in February 1997 through September 30, 1997,
Shorebreak had net sales of $3.7 million and net income of $232,000.
The Company believes Xx. Xxxxxxx'x experience, industry contacts and
successful track record will enable the Company to complete the turnaround
started by its current management. Xx. Xxxxxxx commented that "we are committed
to this goal and believe our major equity position and management role in Stage
II will provide excellent opportunities for growth."
Completion of the transactions is subject to various closing
conditions, including majority approval by the Company's shareholders. By year
end, the Company expects to provide its shareholders with a proxy statement
describing the transactions in more detail and the basis for its board of
director's recommendation of the transactions.
The Company is engaged in the design and distribution of an extensive
range of men's and boy's casual apparel and activewear. The Company markets its
apparel to mass merchandisers, department stores, sporting goods chains and
specialty stores under nationally recognized brand names as well as proprietary
and private labels.
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Company Xxxxxxx Xxxxxxxx
Contact: Chief Financial Officer
(000) 000-0000
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