DANNERS <DNNR.O> IN DEAL ON CAPITAL INFUSION
Danners Inc said it has agreed in
principle for Indian LP, a partnership associated with Sherman
Clay Group, to purchase 100,000 shares of redeemable voting
junior preferred stock with a liquidation preference of 20 dlrs
per share and cumulative dividends of 1.60 dlrs per share
annually for two mln dlrs.
    It said the partnership would also receive detachable
warrants to buy 1,600,000 common shares at 1.25 dlrs each,
payable in cash or in junior preferred stock at the liquidation
preference value.                            
    Danners said completion of the infusion would allow the
partnership to name a majority of its board.
    In addition, Danners said it granted the partnership an
option to buy 200,000 more common shares at 1.25 dlrs each,
exercisable if it should fail to meet any condition connected
with the transaction or if principal shareholders should accept
a merger offer from another party.  It said Danners family
members owning 171,538 shares have granted options to Indian to
buy their shares on similar terms and conditions.
    The company said the Danner family options provide that if
the infusion is completed, the partnership will have the option
starting six months later and ending in April 1992 to buy the
shares at the last bid or last sales price, whichever is lower.
    Danners said the agreement is subject to a recapitalization
by its bank group of outstanding loans, satisfactory company
prospects, favorable opinon from an investment banker and
closing by April 30, with possible extensions to no later than
May 11.
    The company lost 529,000 dlrs in the prior year.
    Danners said it has terminated its use of LIFO inventory
accounting, resulting in a restatement of its net worth as of
February 1, 1986, the last day of its prior fiscal year, to
15.5 mln dlrs from 9,901,000 dlrs.  But losses for the year
just ended will result in a net worth deficiency at the end of
that year of about 4,400,000 dlrs or eight dlrs per share.
    The company said it incurred unusual fourth quarter losses
due to the previously-announced closing and disposition of 17
of its 35 3D discount department stores, inventory clearances
and conversion to a new pricing and promotion system.
    The company said if it should fail to perform under the
deal, it could be liable for all expenses incurred by the
partnership.  If it does perform but the infusion transaction
collapses for another reason, it said it could be liable for up
to 50,000 dlrs in expenses.
    It said the Danner family members who have agreed to the
option have the ability to sell some or all of their shares to
the partnership around the closing date at two dlrs each.
    Danners further said it expects to report a loss for the
year ended January 31 of over 19 mln dlrs, substantially worse
than it had expected.
    The company said it also incurred losses in the fourth
quarter on the disposition of nonoperating assets.  It said it
expects to report results for the year soon.
    Danners said problems with its credit relationships,
together with its losses for the year, resulted in its
transaction with Indian, which is intended to alleviate its
problems.
 Reuter
