Wells Fargo: Bank Lending Group Opposes Emerique's Offer for Hartmarx

San Francisco — May 29, 2009 -- Sstatement from Wells Fargo & Company (NYSE: WFC) regarding Emerisque’s offer for Hartmarx Corp.:

The group of banks led by Wells Fargo as agent, which has provided credit to Hartmarx Corp., said today it opposes Emerisque’s offer to acquire Hartmarx, which has been in Chapter 11 since January 2009 and has been unable to repay more than $114 million that it owes the bank group.

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The group said it opposes the offer because Emerisque fails to provide adequate value to Hartmarx’s lenders – who have funded Hartmarx throughout its bankruptcy including, most recently, up to $20 million in additional advances – and also because Emerisque’s offer does not even ensure that Emerisque will continue running Hartmarx’s business operations after the acquisition.

Emerisque’s offer requires selling significant pieces of Hartmarx soon after the acquisition, risking Hartmarx jobs at several U.S. factories and distribution centers. Specifically, Emerisque has committed to sell Hartmarx factories in Rock Island, Ill., and Cape Girardeau, Mo., and its distribution centers in Easton, Penn., and Rector, Ark., all within three months of the acquisition.

Also, Emerisque is unwilling to assume Hartmarx’s obligations to its employees, including health care benefits, retirement, workers’ compensation, or union contract obligations and does not even commit to rehire a specific number of Hartmarx employees. Instead, Emerisque is merely obligated to disclose within one week of acquiring Hartmarx the number of employees Emerisque intends to hire. If Emerisque intends to keep Hartmarx’s business intact, the lending group believes Emerisque should be required to say up front how many of Hartmarx’s employees it will keep and for how long.

The cash portion of Emerisque’s offer has been stated to be $70.5 million. This amount, however, is subject to a working capital adjustment that, based on Hartmarx’s projections, likely will reduce the cash consideration to less than $56 million. This payment would be less than half the total debt Hartmarx owes its lenders. Yet, before repaying Hartmarx’s lenders, Emerisque proposes to pay millions of dollars to Hartmarx creditors who are not entitled to be paid under the Bankruptcy Code before Hartmarx’s lenders.

Emerisque’s offer also lacks financing and capital commitments to fund its purchase, as well as a standard requirement for Emerisque to make a good faith deposit as part of its purchase.

For all these reasons, the lending group believes Emerisque’s offer does not maximize the value of Hartmarx’s assets, nor does it guarantee the continued operation of the company’s current business.

Source: Wells Fargo & Company (NYSE: WFC)