The letter agreement provides for modifications that include NexCen being permitted to receive certain cash distributions from its lock-box accounts on a monthly, rather than quarterly, basis, following delivery of required reports. In addition, the company's subsidiaries that are party to the bank borrowing facility may distribute certain cash to the company to support operating activities in the ordinary course, including previously restricted cash that will be released from certain lock-box accounts.
NexCen has also agreed to provide BTMUCC with monthly, rather than quarterly, reports on its operations and cash flow and additional weekly or biweekly status reports regarding cash flows, cost reductions, potential sales of one or more of its businesses and other business matters. The letter agreement's forbearance period extends through July 17, 2008, although it terminates earlier if new defaults occur.
Robert W. D'Loren, CEO of NexCen Brands, noted, "We're very pleased to have reached an agreement with BTMUCC that provides the company with additional near-term financial flexibility. Securing a long-term solution to the company's liquidity requirements remains one of management's top priorities and this agreement is an important step in enabling us to continue to implement our operating plans for both our license and franchise businesses."
The company further reports that it is working to reach agreement with BTMUCC on a comprehensive restructuring of the bank borrowing facility including, among other things, obtaining relief from an accelerated principal payment obligation in October 2008. NexCen has issued the caveat that "No such agreement has yet been reached, and there can be no assurance that any agreement will be reached and approved by the parties by July 17, 2008, or at all, on terms that will provide the company with the additional liquidity it needs to operate its business."
As previously announced, NexCen has engaged N M Rothschild & Sons Limited to explore strategic alternatives, including the possible sale of one or more of its businesses. The company has received numerous expressions of interest in both the Bill Blass and Waverly brands from domestic and international strategic and financial buyers and is working with Rothschild to evaluate possible transactions.
"We remain committed to providing all of our business partners with the highest level of service, including those working with our Bill Blass and Waverly brands," continued Mr. D'Loren. "We also continue to explore all options that will enhance liquidity for our operations."
There has been no specific references to any sale of the company's two ice cream brands, MaggieMoo's and Marble Slab Creamery of its other food holdings which include Pretzel Time, Pretzelmaker, and Great American Cookies. NexCen's other holdings are the retail footwear and accessories chains The Athlete's Foot and Shoebox New York.
NexCen Brands additionally announced that, since commencing its cost-reduction efforts four weeks ago, the company has eliminated approximately 10% of its total workforce, with staff reductions at both its New York and Georgia operations. These reductions in payroll and salary deferrals are expected to reduce cash outlays by approximately $3.5 million on an annualized basis, and additional expense savings are anticipated.
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|Publication:||Ice Cream Reporter|
|Date:||Jul 20, 2008|
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