Minnetonka-based Fingerhut has taken a step back from the brink. The catalog retailer's parent company said Thursday it has signed a non-binding letter of intent with Peter Lytle's Business Development Group of Wayzata. Both parties describe it as a preliminary step that could lead to a sale of substantially all of Fingerhut's assets. Federated has said it would close Fingerhut, eliminating 4,700 Minnesota jobs, if no buyer can be found.
Peter Lytle's Business Development group made an offer for Fingerhut nearly two weeks ago. Lytle says more evaluation remains to be done, and it's too soon to say how many of the company's 6,000 jobs can be saved. But he says he views Fingerhut very positively.
"We've seen, initially, enough of the company to believe that it is a viable, ongoing business," says Lytle. "We think that the employees are very supportive of making this transaction happen, as well as the customers, and Federated. So we remain upbeat about it."
The letter of intent paves the way for a deeper look into Fingerhut's books. Lytle says that will determine whether the group can find sufficient financing. He says the group's bankers and investors need to understand the detailed workings of Fingerhut. And despite his optimism, Lytle says questions remain.
"This company, along with most direct marketers, was deeply hurt by the activities of Sept. 11. And it needs to be looked at. It needs to be analyzed to make sure that it can pull out of the slump that it was in," says Lytle.
Still, Lytle says he remains positive about the group's ability to complete the transaction. The group has until early March to tell Federated if it wants to - and has the money - to proceed with a purchase.
Federated initially said it was unlikely to find a buyer for Fingerhut. Spokeswoman Carol Sanger says this is but an early step in the process.
"It's good news that needs to be tempered. We certainly don't want employees to be given too much hope that it's a done deal, because it's not a done deal," says Sanger. "It is a step in that direction. It's encouraging, but it is still a long way to go."
Sanger says Federated is not bound to accept their offer if a better one comes along, but she says Lytle's group has offered enough.
"It is a price that we are willing to accept, yes, provided they can get the financing for it," says Sanger.
Minnesota Commissioner of Trade and Economic Development Rebecca Yanisch says financing is the biggest hurdle.
"The financial markets are rather skittish. And it may be a real challenge to find the type of commitment that is needed to make this transaction complete," says Yanisch. "So we really need to take this with a grain of salt. But on the other hand, I think that the caliber of the partnership that's being pulled together here is certainly a very good sign."
Federated says another offer came in Thursday, and the company is still assessing how seriously to take it. The company's formal statement says there are no active discussions with other parties about buying Fingerhut as a going concern. However, Yanisch says she knows of at least one other potential offer in the pipeline.
The stakes include Fingerhut's 2,700 jobs in St. Cloud, where Mayor John Ellenbecker says he's pleased but cautious. Ellenbecker says he assumes there will be some layoffs even with a sale, and he wants the city to develop a plan to help those whose jobs don't survive.
Fingerhut employee Todd Kerfield, and 18-year veteran of the company, says he was excited at the news.
"We realize this is one hurdle in a long process. But we are carefully optimistic that Lytle will put it together and do it right," Kerfield says. "Having a letter of intent versus 'we're going to close the doors and liquidate it,' is a big jump. And people are very pleased that it has gotten this far."
Federated Vice Chairman Ron Tysoe says company officials hope to complete a deal, and the company is prepared to move as quickly as possible.More from MPR