DOW JONES NEWSWIRES
Kellwood Co. (KWD) said it was unable to renegotiate and extend
its bond issue that matured Wednesday and its board extended the
deadline for acceptance of a proposed debt exchange until midnight
Friday.
The company, one of the U.S.'s largest apparel manufacturers,
also negotiated a forbearance agreement with its bank group, led by
Bank of America Corp. (BAC), while it explores alternatives to
strengthen its balance sheet.
Kellwood, which owns such popular clothing brands as Phat Farm,
Sag Harbor and Vince, could be forced to file for bankruptcy
protection if it cannot to reach an agreement with its bondholders,
people familiar with the situation told The Wall Street Journal
last week.
Kellwood was taken private in February 2008 by buyout firm Sun
Capital Partners Inc. for $542 million. The effects of a heavy debt
load and a sharp drop in consumer spending have slammed its
financial results.
During the past two months, Kellwood has tried to renegotiate a
$140 million bond issue and execute a debt exchange with a group of
bondholders. However, Deutsche Bank AG (DB), a large bondholder,
decided not to accept the offer Friday after previously supporting
it.
Chief Executive Michael W. Kramer said the extension would give
Deutsche Bank time to reverse its position and "accept the deal
they helped structure and told us all along that they
supported."
He pointed out that debt maturity - not Kellwood's business
performance - was pressuring the balance sheet. "Our operations and
supply chain are strong and we are currently a profitable company,"
Kramer added.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com