SPIEGEL'S TROUBLES MOUNTING; CATALOGER REPORTS FUNDING BIND.
In a Form 8-K filed with the SEC, the company said that for the reporting period ended Feb. 28, it will fail to meet the minimum performance requirements on two series of asset-backed securities that are backed by bankcard receivables.
That failure would trigger an automatic payout, or early amortization, diverting excess monthly cash flow that is generally used to fund operations to repay principal to investors on an accelerated basis.
The company also stated that it may fall short on the minimum requirements for one of its insured private-label backed securities.
Spiegel has been in default on its existing revolving credit facility since fiscal 2001, which prevents it from borrowing additional funds under that facility, and also makes all existing loans currently due and payable. In the SEC filing, the company stated that while it is "currently considering its alternatives, given its current financial condition, it may be unable to obtain this alternative financing."
In Spiegel's annual report, the company said it was looking to dispose of or liquidate its credit card portfolio by the end of April. The liquidation of these assets is part of an agreement the retailer has with the comptroller of the firm supervising the finance company that runs Spiegel's credit card program. Earlier this month, the comptroller ordered the liquidation of the bankcard.
In the Form 8-K filing last week, Spiegel said it was still trying to sell its bankcard business. "Although the company plans to dispose of the bankcard business, it plans to remain in the private-label credit card business, as these credit card sales are extremely important to its merchant operations, particularly its catalog operations," the retailer said in the filing.
The retailer said it plans on issuing a private-label credit card through its merchant operations. But it is also considering other options. "The company is in the process of establishing an in-house capability to service these receivables, or otherwise it will seek to secure a third-party credit provider," the company said.
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|Title Annotation:||Spiegel Inc.|
|Comment:||SPIEGEL'S TROUBLES MOUNTING; CATALOGER REPORTS FUNDING BIND.(Spiegel Inc.)|
|Author:||Zaczkiewicz, Arthur; Nicksin, Carole|
|Publication:||HFN The Weekly Newspaper for the Home Furnishing Network|
|Date:||Mar 3, 2003|
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