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CHEROKEE ENTERS INTO RESTRUCTURING AGREEMENT WHICH WILL RESULT IN A REDUCTION OF OBLIGATIONS OF APPROXIMATELY $100 MILLION

 SUNLAND, Calif., March 26 /PRNewswire/ -- Cherokee Inc. (NASDAQ: CHKE) and its subsidiary, The Cherokee Group, announced today that they have entered into an agreement in principle with key holders of all of their outstanding securities to an overall financial restructuring which will reduce Cherokee's indebtedness and preferred stock obligations from approximately $190,000,000 to approximately $90,000,000 and which will reduce Cherokee's annual fixed charges (interest and preferred stock dividends) from more than $27,000,000 to approximately $11,000,000.
 Robert Margolis, chief executive officer, said, "I am extremely pleased with this agreement. Management is looking forward to finally being able to devote all of its energy to operating Cherokee's business and building the Cherokee brand. The restructuring also allows our current stockholders to participate in the new financially revitalized Cherokee."
 Cary Cooper, chief financial officer, stated that "Cherokee will immediately commence a solicitation of consents and a prepackaged plan solicitation. If 98 percent of the holders of The Cherokee Group's subordinated debt consent to the restructuring, The Cherokee Group could complete the restructuring out of court. Otherwise, Cherokee Inc. and The Cherokee Group will likely complete the restructuring through a prepackaged Chapter 11 and could emerge in its restructured form by the end of its fiscal year: May 29, 1993." Cooper emphasized that the financial restructuring process will have no adverse impact on Cherokee's customers, suppliers or trade creditors.
 The agreement in principle was entered into by Cherokee Inc., The Cherokee Group, an unofficial committee representing approximately 60 percent of the Senior Subordinated Reset Notes due 1999 of The Cherokee Group, holders of approximately 93 percent of the preferred stock of The Cherokee Group, the two largest holders, representing approximately 35 percent, of Cherokee Inc.'s Senior Subordinated Debentures due 2001, and holders of approximately 95 percent of the preferred stock of Cherokee Inc.
 Under the agreement, holders of the $105.3 million principal amount of old Senior Subordinated Reset Notes will exchange the Reset Notes for 65.5 percent of Cherokee's New Common Stock, and $52.5 million principal amount of new Senior Subordinated Notes due 1999 (the "new notes"). The new notes will bear cash interest at 11 percent per annum; however, if certain cash coverage ratios are not met, Cherokee will have the option to make any or all of the first three interest payments in kind at an annual interest rate of 14 percent. Holders of the $7.3 million liquidation amount of redeemable preferred stock of The Cherokee Group will exchange their shares for $600,000 in cash. Holders of the $31.2 million principal amount of senior subordinated debentures due 2001 of Cherokee Inc. will exchange their debentures for $10 million principal amount of the new notes, 11.5 percent of the new Cherokee common stock and seven-year warrants to purchase additional shares that, when fully issued, would equal 4.0 percent of new Cherokee Common Stock, fully diluted for the exercise of the other warrants issued in the restructuring. Holders of the $8.5 million liquidation amount of redeemable preferred stock of Cherokee Inc. will exchange their stock for 10.0 percent of the new Cherokee Common Stock and holders of the presently outstanding common stock of Cherokee Inc. will exchange such stock for 8.0 percent of the new Cherokee Common Stock and seven-year warrants to purchase additional shares that, when fully issued, would equal 18.0 percent of the Cherokee's fully diluted new Common Stock.
 Cherokee's management team, under the leadership of Margolis, will continue to operate Cherokee and will receive 5.0 percent of the new Cherokee Common Stock and seven-year warrants to purchase shares that, when fully issued, would equal 18.0 percent of the fully diluted new Common Stock.
 The restructuring agreement is subject to a number of customary conditions. Cherokee's banks have indicated their support for the restructuring and Cherokee believes its banks will approve the restructuring and extend Cherokee's bank financing to May 1995.
 -0- 3/26/93
 /CONTACT: Cary Cooper, CFO of Cherokee, 818-951-1002, ext. 200/
 (CHKE)


CO: Cherokee Inc.; The Cherokee Group ST: California IN: TEX SU: RCN

LS-JL -- LA003 -- 9947 03/26/93 08:45 EST
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Date:Mar 26, 1993
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