Talbots Announces New $75 Million Secured Term Loan and Amendment of $200 Million Secured Revolving Credit Facility
February 16 2012 - 5:07PM
Business Wire
The Talbots, Inc. (NYSE:TLB) announced today that the Company
has entered into a new $75 million secured term loan led by Wells
Fargo Bank, National Association. In connection with this
transaction, Talbots also amended its existing $200 million secured
revolving credit facility with GE Capital, Corporate Retail
Finance.
“These transactions enhance the Company’s liquidity, and provide
Talbots with greater financial flexibility to support the Board’s
evaluation of a full range of strategic alternatives,” said Trudy
Sullivan, President and Chief Executive Officer. “We are pleased to
have the continued support of GE Capital, as well as this new
commitment led by Wells Fargo.”
The new $75 million secured term loan, which matures on February
16, 2017, is secured by a first lien on certain real estate and on
intellectual property, equipment and fixtures, and a second lien on
the Company’s remaining assets. The interest rate on the term loan
is equal to LIBOR plus 10%. The lead agent on the term loan is
Wells Fargo Bank, National Association. The Company also announced
that it has amended its existing $200 million secured revolving
credit facility with GE Capital, which was set to expire in October
2013. Under the amended revolving credit facility, which matures on
February 16, 2017, interest on the outstanding principal is LIBOR
plus 2.5% to 3.0%. The facility is secured by a second lien on
certain real estate and on intellectual property, equipment and
fixtures, and a first lien on the Company’s remaining assets.
Additional information related to these financing matters will
be included in the Current Report on Form 8-K to be filed by the
Company.
Company Continues to Explore Strategic Alternatives
As announced in the Company’s press release on December 20,
2011, Talbots Board of Directors continues to explore a full range
of strategic alternatives to maximize value for all Talbots
stockholders. Pending that evaluation, the Company will continue to
pursue its long range plan and the Board of Directors continues its
previously announced search for a successor President and Chief
Executive Officer.
The Board has not set a definitive timetable for the completion
of its evaluation and the Company stated that there can be no
assurance of any transaction as a result of the Board’s review. The
Company does not intend to discuss the status of the evaluation or
provide interim updates.
Perella Weinberg Partners is acting as financial advisor and
Dewey & LeBoeuf LLP is acting as legal counsel to Talbots in
connection with these financings and the Board’s evaluation of
strategic alternatives.
The Talbots, Inc. is a leading specialty retailer and direct
marketer of women’s apparel, shoes and accessories. At the end of
the fourth quarter of 2011, the Company operated 517 Talbots stores
in 46 states and Canada. Talbots brand on-line shopping site is
located at www.talbots.com.
Forward-looking Information
This Press Release contains forward-looking information within
the meaning of The Private Securities Litigation Reform Act of
1995. These statements may be identified by such forward-looking
terminology as “expect,” “achieve,” “plan,” “look,” “projected,”
“believe,” “anticipate,” “outlook,” “will,” “would,” “should,”
“intend,” “potential” or similar statements or variations of such
terms. All of the information concerning the outcome of exploring
strategic alternatives, our future liquidity, future net sales,
margins and other future financial performance and results,
achievement of operating or financial plan or forecasts for future
periods, sources and availability of credit and liquidity, future
cash flows and cash needs, success and results of strategic
initiatives, anticipated cost savings and other reduced spending,
and other future financial performance or financial position, as
well as our assumptions underlying such information, constitute
forward-looking information. Our forward-looking statements are
based on a series of expectations, assumptions, estimates and
projections about the Company, are not guarantees of future results
or performance and involve substantial risks and uncertainty,
including assumptions and projections concerning our internal
operating plan, regular-price, promotional and markdown selling,
operating cash flows, liquidity and sources and availability of
credit for all forward periods. Our business and our
forward-looking statements involve substantial known and unknown
risks and uncertainties, including the following risks and
uncertainties:
- the ability to successfully increase
our customer traffic and the success and customer acceptance of our
merchandise offerings in our stores, on our website and in our
catalogs;
- the risks associated with our efforts
to successfully implement, adjust as appropriate and achieve the
benefits of our current strategic initiatives including store
segmentation, store re-imaging, store rationalization, coordinated
marketing, information technology reinvestments, upscale outlet
expansion and any other future initiatives that we may
undertake;
- the ability to achieve our operating
plan and strategic plan for operating results, working capital and
cash flows;
- the ability to access on satisfactory
terms, or at all, adequate financing and other sources of
liquidity, as and when necessary, to fund our continuing
operations, working capital needs, strategic and cost reduction
initiatives and other cash needs, and to obtain further increases
in our Credit Facility, extend and continue our trade payables
arrangement with our sourcing agent and obtain other or additional
credit facilities or other internal or external liquidity sources
if cash flows from operations or other capital resources are not
sufficient for our cash requirements at any time or times;
- the satisfaction of all borrowing
conditions under our Credit Facility and secured term loan
including accuracy of all representations and warranties, no
defaults or events of default, absence of material adverse effect
or change and all other borrowing conditions;
- risk of outcome of strategic review
process and negative reaction of and attendant difficulties in
maintaining or extending relationships and financial arrangements
with suppliers, sourcing agent and landlords in response to
unsolicited acquisition proposal and/or evaluation of strategic
alternatives;
- the risks associated with our efforts
to maintain our traditional customer and expand to attract new
customers;
- the risks associated with competitive
pricing pressures and the current increased promotional
environment;
- the risks associated with our on-going
efforts to adequately manage the increase in various input costs,
including increases in the price of raw materials, higher labor
costs in countries of manufacture and any significant increases in
the price of fuel, which impacts our freight costs;
- the ability to reduce spending as
needed;
- the continuing material impact of the
U.S. economic environment on our business, continuing operations,
liquidity and financial results, including any negative impact on
consumer discretionary spending, substantial loss of household
wealth and savings and continued high unemployment levels;
- the ability to continue to purchase
merchandise on open account purchase terms at existing or future
expected levels and with acceptable payment terms and the risk that
suppliers could require earlier or immediate payment or other
security due to any payment concerns;
- the ability to attract and retain
talented and experienced executives that are necessary to execute
our operating plan and strategic initiatives;
- the ability to accurately estimate and
forecast future regular-price, promotional and markdown selling and
other future financial results and financial position;
- the risks associated with our
appointment of an exclusive global merchandise buying agent,
including that the anticipated benefits and cost savings from this
arrangement may not be realized or may take longer to realize than
expected and the risk that upon any cessation of the relationship,
for any reason, we would be unable to successfully transition to an
internal or other external sourcing function;
- the risks and uncertainties in
connection with any need to source merchandise from alternate
vendors;
- any impact to or disruption in our
supply of merchandise;
- the ability to successfully execute,
fund and achieve the expected benefits of our supply chain
initiatives;
- any significant interruption or
disruption in the operation of our distribution facility or the
domestic and international transportation infrastructure;
- the risk that estimated or anticipated
costs, charges and liabilities to settle and complete the
transition and exit from and disposal of the J. Jill business,
including both retained obligations and contingent risk for
assigned obligations, may materially differ from or be materially
greater than anticipated;
- any future store closings and the
success of and necessary funding for closing underperforming
stores;
- any negative publicity concerning the
specialty retail business in general or our business in
particular;
- the risk of impairment of goodwill and
other intangible or long-lived assets;
- the risk associated with our efforts in
transforming our information technology systems to meet our
changing business systems and operations, including the ability to
maintain adequate system security controls;
- the risks associated with any further
decline in our stock price, including satisfaction of NYSE
continued listing criteria which requires the average closing price
of our common stock to be greater than $1.00 over 30 consecutive
trading days and minimum levels of market capitalization and
- the risks and uncertainties associated
with the outcome of current and future litigation, claims, tax
audits and tax and other proceedings and the risk that actual
liabilities, assessments or other financial impact will exceed any
estimated, accrued or expected amounts or outcomes.
All of our forward-looking statements are as of the date of this
Press Release only. In each case, actual results may differ
materially from such forward-looking information. We can give no
assurance that such expectations or forward-looking statements will
prove to be correct. An occurrence of or any material adverse
change in one or more of the risk factors or risks and
uncertainties referred to in this Press Release or included in our
other public disclosures or our other periodic reports or other
documents or filings filed with or furnished to the SEC could
materially and adversely affect our continuing operations and our
future financial results, cash flows, available credit, prospects
and liquidity. Except as required by law, we do not undertake or
plan to update or revise any such forward-looking statements to
reflect actual results, changes in plans, assumptions, estimates or
projections or other circumstances affecting such forward-looking
statements occurring after the date of this Press Release, even if
such results, changes or circumstances make it clear that any
forward-looking information will not be realized. Any public
statements or disclosures by us following this Press Release which
modify or impact any of the forward-looking statements contained in
this Press Release will be deemed to modify or supersede such
statements in this Press Release.
In addition to the information set forth in this Press Release,
you should carefully consider the risk factors and risks and
uncertainties included in our Annual Report on Form 10-K for the
fiscal year ended January 29, 2011 and other periodic reports filed
with the SEC.
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