Solo Serve Corp. Announces a New Revolving Loan Facility, Chuck Siegel's Acquisition of Shares, and Related Transactions.SAN ANTONIO--(BUSINESS WIRE)--Oct. 3, 1997--Solo Serve Corporation announced today that it has replaced its previous revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility with a new $12 million revolving credit facility with Sanwa Business Credit Corporation. The Sanwa loan will bear interest at the prime rate plus 1 percent floating and will mature three years after the closing date. Interest only shall be due and payable in monthly installments, with the then outstanding principal balance due at maturity. The advance rate under the Sanwa credit facility is in an amount equal to 70 percent of Solo Serve's eligible inventory during the period May 1 through December 10 of each year and 65 percent of eligible inventory at all other times. Depending upon the time of year, the Company's previous loan agreement provided for an advance rate of 55 percent to 60 percent of eligible inventory. Within the new loan facility, Solo Serve may obtain up to $2 million of letters of credit, which, if issued, reduce availability under the revolving loan dollar for dollar. In addition to advances made based upon percentage of eligible inventory, Sanwa has made available an additional $750,000 based upon a letter of credit in such amount provided by the Company's principal stockholder. In a related transaction, Chuck Siegel, President and Chief Executive Officer of Solo Serve, and a related family trust have loaned Solo Serve an aggregate amount of $500,000 in addition to the Sanwa credit facility, which loan is subordinated to the Sanwa Credit Facility (the "Siegel loan"). The loan bears interest at a rate of prime plus 1 percent, and requires monthly payments of interest only for a period of five years, at which time the principal becomes due. The Siegel loan is subordinated to the Sanwa credit facility and to repayment by the Company of any amounts advanced under the letter of credit issued by the Company's principal stockholder. Additionally, the Company's principal stockholder has sold to Chuck Siegel 1,255,000 shares of Solo Serve's common stock, or approximately 30 percent of the aggregate voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the of Solo Serve. The Company's principal stockholder continues to own 1,388,889 shares of Solo Serve's Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , which represents approximately 33 percent of the aggregate voting stock of Solo Serve. Contemporaneously con·tem·po·ra·ne·ous adj. Originating, existing, or happening during the same period of time: the contemporaneous reigns of two monarchs. See Synonyms at contemporary. with the transactions described above, Solo Serve entered into a new five year employment agreement with Mr. Siegel which amends AMENDS. A satisfaction, given by a wrong doer to the party injured for a wrong committed. 1 Lilly's Reg. 81. 2. By statute 24 Geo. II. c. 44, in England, and by similar statutes in some of the United States, justices of the peace, upon being notified of an the terms of his prior agreement and provides that Mr. Siegel will continue to serve as President and Chief Executive Officer of Solo Serve. The Sanwa loan documents contain customary affirmative covenants Affirmative covenant A bond covenant that specifies certain actions the firm must take. , negative covenants A provision found in an employment agreement or a contract of sale of a business that prohibits an employee or seller from competing in the same area or market. A negative covenant is commonly used by businesses, particularly those that depend upon trade secrets for their , events of default and other similar terms for asset-based loans An asset-based loan is a loan, often for a short term, secured by a company's assets. Real estate, A/R, inventory, and equipment are typical assets used to back the loan. The loan may be backed by a single category of assets or some combination of assets, for instance, a of this type. The financial covenants are tested quarterly beginning January 31, 1998 and require Solo Serve to maintain specified Interest Coverage Ratios for various periods and specified minimum Net Worth, as defined in the loan agreement, on designated dates through the maturity of the loan. Solo Serve is required to maintain minimum Net Worth of $720,000 and $70,000, respectively, at January 31, 1998 and April 30, 1998 with the required Net Worth increasing thereafter as specified in the loan agreement. The loan agreement defines "Net Worth" as assets less liabilities, plus the amount of the Siegel loan. Solo Serve Corporation operates a 27-store chain of off-priced retail stores in Texas and Louisiana and is headquartered in San Antonio, Texas “San Antonio” redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. . CONTACT: Solo Serve Corp., San Antonio San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. Ross E. Bacon or Chuck Siegel, 210/662-6262 |
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