At the festive unveiling of a new ad campaign featuring a flock of sheep yesterday, Jos. A. Bank Clothiers Inc. gave a serious announcement that also was a cause for celebration: A preliminary agreement was reached early yesterday to convert its $50 million in "junk-bond" debt into equity.

Under the direction of its new turnaround management team, the Owings Mills-based clothier said that it had reached an agreement with Bank's 13 bondholders to convert the debt, which Bank took on during a leveraged buyout in 1986 arranged by the now-defunct Drexel Burnham Lambert.

In turn, the bondholders -- who are spread throughout the country -- will receive a majority stake in Bank, said Chief Executive Timothy L. Finley, who took the helm of the clothier in August to help make the highly leveraged chain profitable.

Quantum Fund of New York now owns roughly 80 percent of the retailer, but it will become a minority shareholder with the conversion.

Mr. Finley said that specific details of the debt conversion will not be firmed up until later this week, but industry observers said the the resulting equity from the deal is a boon for the privately held clothier, especially in the current retailing climate, where obtaining capital can be difficult.

Bank also unveiled yesterday a $6.5 million television and radio advertising campaign featuring the laconic wit of Steve Landesberg, best known for his role as Sergeant Dietrich on "Barney Miller."

The five TV and two radio spots, which were designed by Baltimore's W. B. Doner and Co., emphasize the quality and value of Bank's clothing, much of which is hand-sewn clothing.

One ad features Mr. Landesberg with a flock of sheep while he talks about Bank's men's and women's suits being made from the finest wool around the world. To prove it, Mr. Landesberg asks one sheep where he is from. The response is a "Baaa," but Mr. Landesberg translates that to the viewer to mean "Australia."

Another ad features Mr. Landesberg with stockbrokers clad in boxer shorts and tee-shirts. They are told to go out and buy suits: One comes back with two from Jos. A. Bank -- presumably because clothes are less expensive there -- while the other comes back with one.

"Which one would you trust with your money?" asks Mr. Landesberg.

The slogan of the campaign, which starts today, is: "There is no status in overpaying." That slogan has significant meaning to Bank, which has been suffering under the pressures of its own leveraged buyout in which the "magnitude of the purchase price was not commensurate with the earning power of the enterprise," Mr. Finley said several months ago.

Henry "Chick" Schwartz, a merchandising expert with more than 30 years of retailing experience who was brought in by Mr. Finley to be president, said he thought the timing was good for the ad campaign. Bank's value is being stressed at a time when consumers are cutting back on spending, and the name recognition of the clothier is being boosted just as it is changing its clothing image.

"We're going to start carrying unstructured jackets, wide-leg pants and more interesting colors," Mr. Schwartz said.

Those changes will become evident in Bank's clothing lines in its 40 stores in 29 markets by fall, he said.

The clothier also has started a "Wardrobe Collection" in its catalog division and in 10 of its stores, including one in the Stores at Kenilworth in Towson. The new collection allows Bank's male customers to buy parts of a suit in different sizes.

For example, a person could by a size 34 jacket and a size 42 pants that matched as a perfect suit. That service is usually offered with women's clothes, Mr. Schwartz said.

The feature will be available at all Bank stores by fall, he said.

He said that he has also placed orders for skirts that fall well above the knee. "Have you ever seen that at Bank before? Never," he said. "When I got here the people here compared us to Brooks Brothers. We're going to be snazzier than that."

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