Eddie Bauer Holdings has identified errors related to its tax accounting for 2005 and prior years. As a result, the retailer decided to postpone a key meeting on Thursday, when stakeholders were scheduled to vote on selling the company to buyout firms Sun Capital Partners and Golden Gate Capital for $286 million.
The errors relate to the determination of deferred tax assets and goodwill on its balance sheets, arising from the treatment of leasehold improvements, Eddie Bauer elaborated in a press release. The retailer said the problems were discovered while preparing its financial statements for 2006.
The company said it is working with its accounting firm, BDO Seidman, to determine whether it needs to restate prior results. “At this time, the company is continuing to review the matter and will provide further information when available,” Eddie Bauer added.
It also said the special stakeholder meeting will be held no later than February 8. The parties involved in the deal have agreed to waive the breach of the merger agreement that would have otherwise been invoked when Eddie Bauer postponed the January 25 meeting. The company further stressed that the buyers, which also agreed to assume $328 million in debt, have not waived any other rights. The merger agreement remains in “full force.”
In a separate announcement, Eddie Bauer said proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co. recommend that their clients vote for the company’s proposed sale to Eddie B Holding Corp.
Eddie Bauer recently reported that sales for 2006 fell to $957 million from $1 billion the prior year while same-store sales fell 2.2 percent.