Converse Inc. Receives Financing Commitment.Business Editors NORTH READING, Mass.--(BUSINESS WIRE)--Aug. 9, 2000 Converse (logic) converse - The truth of a proposition of the form A => B and its converse B => A are shown in the following truth table: A B | A => B B => A ------+---------------- f f | t t f t | t f t f | f t t t | t t Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CVEO) today announced that it has received a commitment letter from Euro American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Investment Corporation ("Euro American"), a private investment concern, to provide $25,000,000 in credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing to afford the Company additional liquidity under its credit agreement. Under the terms of the commitment letter, Euro American would also purchase, at $0.001 per share, 20,000,000 shares of common stock of Converse and would have an option, for six months following the closing of the $25,000,000 financing, to provide an additional $50,000,000 in secured debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and receive warrants to purchase up to 50,000,000 shares of stock at $1.50 per share. The commitment letter also provides for designees of Euro American to become a majority of the Board of Directors. The $25,000,000 financing is subject, among other things, to the negotiation of definitive legal documentation, approval by the Company's Board of Directors, and other customary closing conditions (including Hart-Scott-Rodino clearance) and requires the existing secured creditors One who holds some special monetary assurance of payment of a debt owed to him or her, such as a mortgage, collateral, or lien. of Converse to consent to the transaction. The transaction is expected to close by August 31, 2000 subject to receipt of required consents and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. review. As previously announced, Converse is currently in covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the default under its senior secured bank line of credit and senior secured notes, as well as interest payment default under its 7% convertible subordinated notes. In addition, the trustee for the holders of 7% convertible subordinated notes (the "Subordinated Notes") has now sent Converse a letter stating that holders of at least twenty-five (25%) percent of the Subordinated Notes had directed it to declare the full amount of principal and interest under those notes to be due and payable. Euro American and the Company have been in communication with the trustee and certain holders of the Subordinated Notes. Converse expects those communications to continue. Any statements set forth above which are not historical facts, including those statements indicating the belief, expectation or intent of the Company, are forward looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Potential risks and uncertainties include such factors as the financial strength of the Company, the competitive pricing environment and inventory levels within the footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). and apparel industries, consumer demand for athletic footwear, market acceptance of the Company's products, the availability and cost of working capital financing, the strength of the U.S. dollar, the success of planned advertising, marketing and promotional campaigns, the ability of the Company to complete a proposed financing transaction and other risks identified in documents filed by the Company with the Securities and Exchange Commission. |
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