Freedom 100 Emerging Mar... (AMEX:FRDM)
Historical Stock Chart
From Oct 2019 to Oct 2024
Friedman's Embarks on Financial Restructuring
Enters Into $60 Million "Tranche B" Commitment Letter
SAVANNAH, Ga., Aug. 5 /PRNewswire-FirstCall/ -- Friedman's Inc. (OTC:FRDM),
the Value Leader in fine jewelry retailing, today announced that it has entered
into a commitment letter with Farallon Capital Management, L.L.C. ("Farallon"),
an affiliate of one of the lenders under the Company's existing secured credit
facility, which could provide as much as $25 to $30 million of additional
availability to the Company under its credit facility. The commitment is
subject to the satisfaction of numerous conditions, including the approval of
the lenders under the Company's existing secured credit facility; the
satisfactory completion of ongoing due diligence; negotiation and execution of
definitive documentation; and the satisfaction of customary closing conditions.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020215/FRIEDMANLOGO )
The commitment provides for a new layer of financing as part of a restructuring
of Friedman's senior credit facility, together with a program that requires
continued support from Friedman's vendors over the next year. The extent to
which the Company will be able to draw upon the full amount of additional
availability will depend upon, among other things, the Company's ability to
enter into vendor support agreements acceptable to the Company and its lenders.
"Since joining the Company six weeks ago I have spoken with our lenders and
many of our vendors and other key constituents, and have appreciated the
expressions of support toward a financial restructuring; our focus now is to
bring this agreement to fruition," said Friedman's CEO, Sam Cusano. Mr. Cusano
noted that a key aspect of this restructuring effort is vendor support.
"Clearly, our vendors have been great partners in the past," he added. "We now
need to obtain our vendors' firm commitment to help us make this restructuring
a success."
Under the proposed Amended and Restated Credit Facility, a portion of the
additional availability would be reserved pending implementation of a vendor
support program. At the Company's request, a group of its largest vendors have
organized an informal committee and retained counsel to facilitate the
implementation of the Company's vendor support program, which would involve a
restructuring of outstanding amounts owed as well as the restoration of trade
terms. The Company has already met with many of its largest vendors and
expects these discussions to continue with the assistance of the informal
committee.
The Amended and Restated Credit Facility would provide for total commitments of
$135 million comprised of a $75 million senior revolving loan and a $60 million
junior term loan. While the amount of the total commitment is notionally less
than the $150 million under the current credit facility, the institution of
reserves under the existing credit facility has made approximately $40 million
of the approximately $124 million of current funding permitted under the
borrowing base in the existing credit facility unavailable to the Company.
Friedman's believes that the revised terms and structure of the facility,
together with vendor support, should provide adequate liquidity to move
forward, assuming that the required agreements with the Company's lenders and
vendors can be reached over the next month or so to provide adequate time to
obtain the inventory required for Friedman's holiday season sales plan.
The Company has deferred most current payments to vendors over the last sixty
days and many key vendors have reduced, delayed or suspended merchandise
shipments to the Company during that time. The Company's management is working
with its lenders, vendors and other key stakeholders to develop a restructuring
plan which includes the proposed refinancing that should provide adequate
liquidity for the Company and stabilize operations going forward if completed
on a timely basis. However, as there is no assurance that this will occur, and
in order to pursue all appropriate paths to maximize the Company's business
value for its stakeholders, the Company may need to consider alternative
restructuring scenarios including in the context of a judicial reorganization.
While the refinancing commitment letter announced today is the Company's
preferred path to address the Company's liquidity requirements, these other
alternative restructuring alternatives will be explored as necessary on a
contingency basis.
Separately, the Company also announced that Peggy Brockschmidt has resigned as
a member of the Board of Directors. Chairman Allan Edwards said, "We
appreciate Peggy's willingness to serve during this transition period while we
rebuild our board and our senior management team. We thank her for her service
and contributions to the board."
About Friedman's
Founded in 1920, Friedman's Inc. is a leading specialty retailer based in
Savannah, Georgia. The Company is the leading operator of fine jewelry stores
located in power strip centers and regional malls. For more information, go
to: http://www.friedmans.com/ .
This release has been prepared by Friedman's.
Farallon provides information about its firm at http://www.faralloncapital.com/
.
Some of the statements included in this press release, particularly those
anticipating future financial performance, business prospects, growth and
operating strategies, the obtaining of additional financing and similar
matters, are forward-looking statements that involve a number of risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are not guarantees of
future performance and a variety of factors could cause the Company's actual
results to differ materially from the anticipated or expected results expressed
in these forward-looking statements. The Company undertakes no obligation to
update or revise any such forward-looking statements. The forward-looking
statements, the Company's liquidity, capital resources, ability to obtain
additional financing and results of operations are subject to a number of risks
and uncertainties, including but not limited to, the following: adverse
effects from the Company's delay in paying suppliers and from suppliers not
delivering merchandise; the ability of the Company to comply with the terms of
its credit facility; the ability of the Company to satisfy all conditions
precedent, including due diligence requirements, to any proposed additional
financing; the willingness of the Company's vendors to participate in a vendor
support program; potential adverse developments with respect to the Company's
liquidity and/or results of operations; competitive pressures from other
retailers; trends in the economy as a whole which may affect consumer
confidence and consumer demand for the types of goods sold by the Company; the
ability of the Company to attract, retain and compensate key executives and
associates; the ability of the Company to attract and retain customers;
potential adverse publicity; the ability of the Company to achieve the cost
savings and operational benefits projected from its planned store closings; the
final results of the audit including the review of the calculation of our
allowance for doubtful accounts; the results of the SEC and Justice Department
investigations; the results of various litigation; the effect of the
restatement on our credit facilities, including funding availability thereunder
and our relationship with our lenders; the effect of the restatement on our
future earnings, including any adjustments to previously announced earnings
forecasts; and other risk factors identified from time to time in our SEC
reports, including, but not limited to, the report on Form 10-K for the year
ended September 28, 2002.
Contact:
Jane D'Arcy
Trion Communications
(401) 453-3100 ext. 104
http://www.newscom.com/cgi-bin/prnh/20020215/FRIEDMANLOGO
http://photoarchive.ap.org/
DATASOURCE: Friedman's Inc.
CONTACT: Jane D'Arcy of Trion Communications, +1-401-453-3100 ext. 104,
or
Web site: http://www.friedmans.com/
http://www.faralloncapital.com/