The capital increase will raise the number of outstanding shares to 20.9 million from 17.9 million, generating net proceeds of about 50 million euros, or $77.5 million.

It is still not known whether companies under Herz ownership have acquired a 12 percent interest in the German fashion company as reported in the German financial press. At present, Rustam Aksenenko remains Escada's largest shareholder, with an approximately 27 percent stake.

Escada also said Tuesday that one of the firm's banks will replace an existing 90 million euro, or $139.5 million, credit facility set to lapse at the end of 2008 with a new 90 million euro credit with a term until Dec. 31, 2009.

Due to the planned changes in ownership, Escada said Wolfgang Herz and the Munich attorney Reinhard Pöllath will join the supervisory board. Pöllath will assume the chair from Claus Mingers, who will remain a board member.

Escada founder Wolfgang Ley, who still owns a minority stake of between 5 and 10 percent in the fashion house, told WWD, "After this terrible situation, when my company was practically ruined, I think my baby is in the best possible hands. Bruno Sälzer is one of the best European ceo's I can think of and for me it's an honor he's joining the company and bringing a highly experienced chief operating officer.

"Dr. Pöllath is one of the best commercial lawyers and entrepreneurs in Germany," he continued. "And the Herz family is fantastic. They're incredibly solid and one of the richest families in Germany. They know branded goods management with Nivea, and I don't think they'll be satisfied with a minority interest," he suggested.

As for himself, Ley said he'll definitely subscribe to the second tranche of the capital increase.