Hanover boosts liquidity
June 18, 2004-- Home Textiles Today,
EDGEWATER, N.J. — Hanover Direct said it has reworked its credit facility and secured $25 million in additional liquidity.
Controlling shareholder Chelsey Direct is providing a $20 million junior secured loan over a three-year term, subject to earlier maturity if there is change in the control or sale of the company. Chelsey Direct will receive warrants to purchase 30 percent of Hanover Direct's common stock at an exercise price of $.01 per share. It also may purchase a newly issued series of nonvoting preferred stock that will be automatically exchanged for the common stock warrants. Chelsey Direct will also receive certain other customary fees for the transaction. The deal is subject to shareholder approval and will move forward upon the completion of the retailer's credit facility amendment.
The cataloger said Congress Financial Corp., its senior secured lender, has agreed to amend to its current credit facility. The restated agreement will consist of a revolving credit facility of $34. million, and a term loan facility of approximately $5.5 million, representing the existing Tranche A term loan. Hanover Direct's Tranche B term loan of approximately $5.1 million will be paid in full from the Chelsey Direct loan.
"The capital infusion will substantially enhance the company's working capital position, increase inventory levels and fill rates and reduce back order levels as well as provide it with the resources necessary to invest in the company's core businesses and satisfy demand for its products," said Wayne Garten, president and CEO.
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