NEW YORK — The He-Ro Group, which has been sharply downsized since its chairman and founder, Herbert Rounick, died last September, has reached agreements with its banking group for a $20 million credit line.
The company said Friday that its agreements with the lending group on amendments to its credit facility brings it into compliance with all terms of the agreement.
He-Ro stock closed Friday at 2, up 1/4 on the New York Stock Exchange.
Under the new agreement, the original credit line of $40 million has been reduced to $20 million. Since the company is now much smaller than it was, the new line will be sufficient, a He-Ro spokesman said.
Rounick’s death in September and the decision in October to restructure placed the company in violation of the loan agreement. He-Ro has been negotiating with its banks since September in an effort to obtain waivers.
For the most recent fiscal year ended May 31, He-Ro reported a pretax loss of $4.3 million on sales of $170 million and noted that it was in violation of various net worth and working capital requirements in the original agreement.
Meanwhile, the company has been cutting back its operations, dropping a number of designer-licensed lines, including Bill Blass, Bob Mackie and Oscar de la Renta.
For the six months ended Nov. 30, the company reported a loss of $22.9 million after restructuring charges of $17 million. Sales in the half dropped to $60.4 million from $97.6 million.
He-Ro will focus its core evening and special occasion business on the Black Tie by Oleg Cassini line and its proprietary Niteline product lines and on its 25 outlet stores.
Among the banks in the lending group are Marine Midland Bank, Chase Manhattan Bank, The Hong Kong and Shanghai Banking Corp. Ltd. and ABN AMRO Bank NV.