Cash-strapped NexCen Brands Inc. and BTMU Capital Corp. said Monday that they entered into a letter of agreement that extends a forbearance period by one week until this Friday.
This story first appeared in the August 12, 2008 issue of WWD. Subscribe Today.
The agreement with BTMU Capital Corp. gives NexCen access to additional cash from its lockbox accounts and limited forgiveness from “certain alleged defaults.” The company agreed to give monthly rather than quarterly updates on its operations and cash flow to the lender.
NexCen fell on troubled times in May when it disclosed that $30 million of the $70 million it borrowed to acquire Great American Cookies must be paid down by Oct. 17.
The initial period NexCen had to cure the defaults was set for July 17. That was later extended until Aug. 8 before the parties pushed back the date again.
NexCen said Monday that it and BTMUCC continue to work on finalizing agreements to effect a comprehensive restructuring of the company’s borrowing facility, and that it expects such agreements to be completed next week.
NexCen has been working since May to streamline operations. In June, the firm reduced its total workforce by 10 percent, a move expected to reduce cash outlays by about $3.5 million.
The company is also currently in exclusive talks with Windsong Apparel Group about the sale of Waverly, its home furnishings brand.
After the Waverly sale is completed, sources said NexCen will then focus on selling its Bill Blass brand.
According to a banking source, efforts so far to sell Blass have been less than rigorous. NexCen’s financial adviser only last week began sending out one-page information sheets that contained information about existing licenses for Blass.
NexCen, as a brand management company engaged in licensing, wouldn’t have much information about the Blass brand, other than licensing agreements in place and royalties in place for those agreements.
Consequently, any buyer would have to determine what it thinks it can do with the Blass label through brand extensions, channels of distribution and international expansion and make an offer based on those projections, the banker said.