The letter agreement provides for the following modifications:
* The company will be permitted to receive certain cash distributions from its lock-box accounts on a monthly, rather than quarterly, basis, following delivery of required reports.
* 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.
* The company has agreed to provide BTMUCC with monthly, rather than quarterly, reports of the company’s operations and cash flow and additional weekly or bi-weekly 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.
“We’re very pleased to have reached an agreement with BTMUCC that provides the Company with additional near-term financial flexibility,” states Robert W. D’Loren, CEO of NexCen Brands. “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 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. 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.
The company also announced today that its exploration of strategic alternatives is focused on a possible sale of its Bill Blass and Waverly brands. As previously announced, NexCen Brands 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,” continues Mr. D’Loren. “We also continue to explore all options that will enhance liquidity for our operations.”
NexCen Brands additionally announced that, since commencing its cost-reduction efforts four weeks ago, the company has eliminated approximately 10 percent 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.