Cygne Designs, Inc. Announces Proposed Sale Of Its Ann Taylor Sourcing Business

Business Wire, April 8, 1996

NEW YORK--(BUSINESS WIRE)--April 8, 1996--Cygne Designs, Inc. (Nasdaq:CYDS) today announced that it had entered into an agreement in principle with AnnTaylor Stores Corporation (NYSE:ANN) pursuant to which Ann Taylor will acquire Cygne's 60% interest in CAT, Cygne's sourcing joint venture with Ann Taylor, and the assets of Cygne's Ann Taylor Woven Division that are used in sourcing merchandise for Ann Taylor.

The aggregate consideration to be paid to Cygne in the transaction consists of unregistered shares of Ann Taylor common stock having a market value of $36 million (based upon the market price of the common stock for the ten trading days prior to closing, but in no event greater than 2.5 million shares), and cash in an amount equal to the tangible net book value of the inventory and fixed assets of Cygne's Ann Taylor Woven Division, less certain assumed liabilities of the division. The closing of the transaction is subject to various conditions, including the negotiation and execution of definitive documentation, approval by the Company's stockholders, the Company's receipt of a fairness opinion from its financial advisor, the consent of the Company's and Ann Taylor's lenders, the continuation of CAT's $40 million credit facility, and the consummation by Ann Taylor of a $75 million private offering of securities. It is currently anticipated that the transaction will close in July 1996, although there can be no assurance that the transaction will be consummated in this time frame or at all. In order to facilitate the integration of CAT and Cygne's Ann Taylor Woven Division into Ann Taylor's operations, Cygne has agreed to make available for a three year period the services of Mr. Bernard Manuel, the Company's Chief Executive Officer, and Mr. Irving Benson, the Company's President. Cygne will make available up to 30% of Messrs. Benson's and Manuel's time and will receive an aggregate fee of $450,000 per year. Ann Taylor has agreed to register the shares issued to Cygne for resale, although Cygne will be subject to certain restrictions on the timing of sales and the amount of shares which can be sold at any one time. The Company stated that Cat and the Ann Taylor Woven Division accounted for approximately 54% of the Company's estimated net sales of $431 million (excluding net sales of the recently sold GJM Group) for the Company's fiscal year ended February 3, 1996. The Company expects to report a net loss in excess of $120 million for its recently ended fiscal year, including approximately $78 million resulting from the write-off of goodwill associated with the FWM acquisition and the loss on the sale of the GJM Group.

The Company also stated that it continues to be in non-compliance with the financial covenants in its bank credit agreement and that its trade credit facility remains suspended as a result of the failure to make payments thereunder when due. At April 5, 1996, the Company had approximately $36.5 million outstanding under these facilities.

Cygne Designs, Inc. is a private label designer, merchandiser and manufacturer of women's apparel.

CONTACT: CYGNE DESIGNS, INC.

Roy E. Green

Chief Financial Officer

(212) 354-6474

or

Investor Relations:

David Walke, Howard Zar, Shannon Moody

Press: Leslie Feldman

Morgen-Walke Associates

(212) 850-5600