NexCen Brands, Inc., today announced that the Company has entered into an amendment of its credit facility with BTMU Capital Corporation (BTMUCC).
The amendment reduces the interest rate on the Class B Notes, the outstanding balance for which total approximately $41.7 million, to 8 percent per year, effective Jan. 20, 2009, through July 31, 2011, the maturity date on the Notes. As a result of the interest rate change, the Company anticipates interest expense reductions of approximately $2.2 million in 2009, $2.8 million in 2010 and $1.5 million in 2011. Prior to the amendment, the interest rate on the Class B Notes was 12 percent from Aug. 15, 2008, through July 31, 2009, then 15 percent from Aug. 1, 2009, through maturity of the Notes.
In addition to the change in interest rate on the Class B Notes, the amendment also gives the Company greater operating flexibility by: (i) reducing the debt service coverage ratio for 2009; (ii) allowing certain funds paid by supply vendors to be excluded from debt service obligations and capital expenditure limitations; (iii) narrowing the covenant causing a manager event of default upon NexCen filing a qualified financial statement to exclude the 2008 fiscal year; and (iv) eliminating the requirement for valuation reports for fiscal year 2008 unless requested by BTMUCC.
“We are extremely pleased with the continued support of our lender,” says Kenneth J. Hall, CEO of NexCen Brands. “Importantly, with the divestitures of Waverly and Bill Blass last quarter, we have reduced the Company’s debt by $34 million, or 24 percent, to approximately $142 million as of Dec. 31, 2008. … We have made significant progress in our revised business strategy focusing on franchising and continue to strengthen the financial position of the Company.”