Cherokee Global Brands Amends Credit Facility with Cerberus
November 13 2017 - 9:00AM
- New financial terms provide greater financial flexibility
- Amendment to eliminate obligation to call equity
commitments
Cherokee Global Brands (NASDAQ:CHKE), a global brand marketing
platform that manages a growing portfolio of fashion and lifestyle
brands, today announced the amendment, subject to the satisfaction
of certain conditions, of its senior secured credit facility(the
"Amendment").
"We are pleased to announce the amendment of our credit facility
with our lenders, whom we thank for their collaborative approach
throughout the amendment process,” commented Henry Stupp, Chief
Executive Officer of Cherokee Global Brands. “The amendment
revises the financial covenants materially to enable the company to
focus on growing the business for the long term. Importantly, as
part of the amendment, we have eliminated the liquidity call which
could have potentially resulted in the issuance of approximately
$5.5 million in additional common stock. The amendment of our
credit facility is a very positive development for the Company and
important to stabilizing our balance sheet, sustaining liquidity
and better positioning us for profitable future growth."
Mr. Stupp continued, “Over the last several months, we’ve taken
several actions to focus on our core business fundamentals and
high-growth brand opportunities During this time, we have
made efforts to strengthen our team while addressing our financial
solvency. As a result, we are focused on reducing
operating expenses and improving cash flow. We’re comfortable
with our financial position and confident in our ability to meet
our existing obligations.”
The Amendment, among other things, eliminates the requirement
that the Company, under certain circumstances, exercise its rights
to call the equity commitment rights under certain Common Stock
Purchase Agreements dated August 11, 2017. Upon the
effectiveness of the Amendment, such commitments are expected to no
longer be in effect, and none of the Company, the lenders under the
senior secured credit facility or the investors under such
agreements would have the right to require the investors to
purchase the Company’s common stock under such agreements. As
a result, the special meeting of stockholders that had been called
for November 28, 2017 to approve such issuances is expected to be
cancelled. The Amendment also provides, as a condition to the
effectiveness of the Amendment, that investors purchase
participations from the lenders under the senior secured credit
facility in an aggregate amount of no less than $11.5 million on or
before December 8, 2017. The Company is in advanced
discussions with investors who have indicated an interest in
purchasing such participation interests and anticipates that it
will announce a completion of that investment on or before December
8, 2017.
Additional information and a full copy of the amendment are
included in the Company's Form 8-K filed today with the Securities
and Exchange Commission.
About Cherokee Inc.Cherokee is a global brand
marketing platform that manages a growing portfolio of fashion and
lifestyle brands including Cherokee®, Carole Little®, Tony Hawk®
Signature Apparel and Hawk Brands®, Liz Lange®, Everyday
California®, Sideout®, Hi-Tec®, Magnum®, 50 Peaks®, Interceptor®
and Flip Flop Shops®, a franchise retail chain, across multiple
consumer product categories and retail tiers around the world. The
Company currently maintains license and franchise agreements with
leading retailers and manufacturers that span over 110 countries in
12,000 retail locations and digital commerce.
Safe Harbor Statement This news release
may contain forward-looking statements regarding future events and
the future performance of Cherokee. Forward-looking statements in
this press release include, without limitation, express or implied
statements regarding: the Company’s ability to complete the sale of
participation interests in the Cerberus Credit Facility; the
Company’s expectations regarding its ability to satisfy the revised
financial covenants; the Company’s ability to sustain necessary
liquidity and grow its business; the anticipated impact of the
additions to its accounting staff; and anticipated market
developments and opportunities. A forward-looking statement
is neither a prediction nor a guarantee of future events or
circumstances and is based on currently available market,
operating, financial and competitive information and assumptions.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those expected
or projected, including, among others, risks that: the Company will
not be able to complete the sale of the participation interests on
terms acceptable to the Company or Cerberus, on a timely basis, or
at all; the Company and its partners will not achieve the results
anticipated in the statements made in this release; global economic
conditions and the financial condition of the apparel and retail
industry and/or adverse changes in licensee or consumer acceptance
of products bearing the Company’s brands may lead to reduced
royalties; the ability and/or commitment of the Company’s licensees
to design, manufacture and market Cherokee®, Hi-Tec®, Magnum®, 50
Peaks®, Interceptor®, Carole Little®, Tony Hawk® and Hawk Brands®,
Liz Lange®, Everyday California® and Sideout® branded products
could cause our results to differ from our anticipations; the
Company’s dependence on a select group of licensees for most of the
Company’s revenues makes us susceptible to changes in those
organizations; and the Company’s dependence on its key management
personnel could leave us exposed to disruption on any termination
of service. The risks included here are not exhaustive.
Other risks and uncertainties are described in our annual report on
Form 10-K filed on May 18, 2017, its periodic reports on Forms 10-Q
and 8-K, and subsequent filings with the SEC we make from time to
time, including the preliminary prospectus supplement that we filed
in connection with the offering described herein. Except as
required by law, we undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Investor Contact:Cherokee Global BrandsJason Boling,
CFO818-908-9868
Addo Investor RelationsLaura Bainbridge/Patricia
Nir310-829-5400
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