NEW YORK -- The Warnaco Group Inc. on Thursday received Manhattan bankruptcy court approval to amend its debtor-in-possession financing facility and lower it by $125 million.
The amendment modifies the required level of EBITDAR -- earnings before interest, taxes, depreciation, amortization and certain restructuring charges -- under the original DIP arrangement. Warnaco said that because it has "significant improvements in cash management," the amount of the facility has been reduced to $475 million from $600 million.
Under the amended agreement, the company is required by its bank lenders to file a plan of reorganization by July 31, 2002. The deadline may be extended at the discretion of the administrative agent for the lending group.
Tony Alvarez, chief executive officer, said in a statement, "Our post-petition experience has indicated that the revised DIP facility will be sufficient to help fund our operations and finalize a plan of reorganization in mid- to late-2002. We are moving forward with the sale of specific, non-core assets, and we expect that process to accelerate in the new year."
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Earlier this month, Warnaco received bankruptcy court approval to conduct an auction of its GJM division, the private label sleepwear and intimate apparel operation. According to a Warnaco spokesman, an auction will take place on Jan. 15, with the submission of bids to occur on Jan. 10.
According to bankruptcy court documents, Warnaco reserves the right to cancel the proposed sale in the event that either a suitable purchase price or satisfactory terms of sale cannot be reached.
Founded in 1985, GJM had 2000 sales of $76 million, about 80 percent of which were made to retail accounts.
Warnaco said in court papers that it decided to sell GJM because of the "continuing deterioration of that business during the course" of the bankruptcy. The uncertainties in connection with the bankruptcy, Warnaco said, have "placed GJM at a competitive disadvantage, which has adversely impacted its book of orders, prospects and profitability."
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