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Tandy Brands to Cease Operations

Salus, senior secured lender, said firm in default on facility agreed to in July.

Tandy Brands Accessories Inc., the men’s belts and leather goods producer that has spent much of the past year engaged in a series of liquidity battles, intends to discontinue its operations.

The company said it would shutter after attempting to sell of some of its assets, including a facility in Mexico that was closed earlier this week, and its remaining inventory of men’s and boys’ belts, which it hopes to sell to Wal-Mart Stores Inc.

After violating the covenants of its earlier credit facility with Wells Fargo Bank following a shortfall in sales of gift merchandise during the 2012 holiday season, Tandy secured $29 million in financing from Salus Capital Partners in July that was secured by essentially all of the company’s assets.

However, it defaulted on the new facility after delays in the closing of the Salus deal caused lateness in gift deliveries for holiday 2013 and it was unable to meet other shipment windows because of damage to a Chinese production facility in early October because of Typhoon Fitow. It lost $958,000 in the quarter ended Sept. 30 as sales slid 23 percent to $19.9 million.

According to a Securities and Exchange Commission filing, Salus formally notified Tandy that it was in default on Wednesday and said it would “exercise certain rights available to it” under the securitization wording of the facility. The SEC document indicated Tandy had been unable “to enter into a strategic transaction that would have allowed [it] to continue operations.”

Calls to Tandy seeking comment weren’t returned.

Shares of Tandy Friday closed down 51.7 percent, or 15 cents, at 14 cents. Their 52-week high, reached on Feb. 8, was $1.59.