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Wet Seal Investor Clinton Explores Taking Company Private

Dec. 18 (Bloomberg) -- Wet Seal Inc. investor Clinton Group Inc., which has been agitating for changes at the apparel retailer for more than a year, said it is exploring options to take the company private.

Clinton, a New York-based hedge fund, said in a filing today that it is looking at financing alternatives to enable itself or one of its affiliates to make an offer to purchase Wet Seal. Clinton also said it increased its stake in the company to 8.1 percent. That would make it Wet Seal’s third-largest investor, according to data compiled by Bloomberg.

Teen retailers have been struggling to entice cash-strapped shoppers into stores this year without major fashion trends. Wet Seal, whose revenue has slid for seven of the past eight quarters, said earlier this month sales at stores open at least a year would decline in the fourth quarter. The shares dropped 47 percent from July 1 through yesterday.

“The notion that the business is worth half of what it was worth in July because all the teenage retailers had a crummy back-to-school is crazy to us,” Clinton Group President Greg Taxin said today in a phone interview. “We’re happy to pay a market premium to this number for sure.”

Clinton would prefer to work with a partner to take Wet Seal private and has had preliminary talks with private-equity firms as well as banks, Taxin said.

Wet Seal, based in Foothill Ranch, California, rose 3.1 percent to $2.67 at the close in New York.

Clinton has been calling for a sale of Wet Seal since July 2012. The retailer fired former Chief Executive Officer Susan McGalla in July 2012 and hired John Goodman for the position in January. Clinton also succeeded in replacing three directors and Wet Seal’s chairman in October 2012, ending a proxy contest after the retailer adopted an anti-takeover defense.

Steven Benrubi, a Wet Seal spokesman, didn’t immediately respond to a telephone message seeking for comment.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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