CALABASAS, Calif., Aug. 16, 2001 (PRIMEZONE) -- The Right Start, Inc. (Nasdaq:RTST), today announced that it has agreed to acquire the assets of Zany Brainy, Inc. Zany Brainy, which currently operates 187 stores, is a major specialty retailer of developmental products for children ages 4 to 12 that filed for Chapter 11 bankruptcy protection on May 15, 2001.
Under the terms of the transaction, the Company will acquire substantially all of the assets of Zany Brainy, including approximately $115 million in cash, inventory, and accounts receivable for $11.7 million in cash, approximately $85 million in the assumption of liabilities, and the issuance of 1.1 million shares of The Right Start, Inc. common stock. Closing of the transaction is expected to occur prior to Sept. 5, 2001, and is subject to final bankruptcy court approval.
In conjunction with its acquisition of Zany Brainy, the Company also announced that Waterton Management LLC, a Los Angeles-based private investment firm, will invest $20 million in The Right Start, Inc. Waterton will receive an approximately 48% fully diluted interest in the Company before consideration of employee stock options. Waterton's investment in the Company is subject to approval by the shareholders of The Right Start, Inc.
Jerry R. Welch, Chairman and Chief Executive Officer, said: "We are very excited about the combination of Zany Brainy and The Right Start. The companies are the two most powerful kids brands in America today and are a perfect complement to each other."
Mr. Welch continued, "We are also pleased to have Waterton Management as our partner. Waterton is one of the premier investors in retailing companies and they will bring tremendous insight and strategic vision to us. Kenneth J. Abdalla, the managing partner of Waterton, will be joining our Board of Directors immediately and Ken will certainly help us accelerate the growth and development of the combined Right Start and Zany Brainy."
"For several years we have admired how Jerry Welch, Ric Kayne and Fred Kayne have built The Right Start into the premier brand for Moms with young children. We are excited by the opportunity to finally partner with our longtime friends," added Kenneth J. Abdalla.
About Right Start
The Right Start, Inc. is the largest national specialty retailer of high-quality developmental, educational and care products for infants and children through age 4. The Right Start brand originated in 1985 through the creation of the award-winning Right Start Catalog(tm). The Right Start now operates 68 retail stores nationwide and is based in Calabasas, Calif.
This press release may contain certain forward-looking statements with respect to the acquisition of Zainy Brainy's assets by The Right Start, the anticipated benefits of combining the companies' brands and retail store base, and the investment by Wateron Management LLC in the Company that may be impacted by factors including, but not limited to, required regulatory approval of the acquisition, shareholder approval of the investment, competition from other retailers and potential product liability claims and other risks included in The Right Start's filings with the Securities and Exchange Commission, including, but not limited to, The Right Start's Registration Statement on Form S-3 (File No. 333-84319), its Annual Report of Form 10-K for the fiscal year ended Feb. 3, 2001, and its quarterly reports.