NEW YORK — HMX Group has closed on a new financing facility with Salus Capital Partners that replaces the one it had with the former lending group led by Wells Fargo and J.P. Morgan.
The new facility is smaller than the $95 million facility it replaced, although the exact amount of the facility could not be learned.
Doug Williams, HMX Group chief executive officer, said, “We are very pleased to have achieved an exit for our former lenders and are excited about the partnership with the Salus Capital group.…We look forward to the continued execution of our plan and turnaround efforts.”
Williams said the new facility “opens up a tremendous amount of liquidity for the firm’s operations and ability to flow fabrics and finished goods to meet customers’ demand. We can now get back to running the business and delivering on time as promised to our customers.”
HMX has been plagued by rumblings since spring that some creditors were either not being paid on time or not at all.
Williams has acknowledged that liquidity issues meant that sometimes vendors whose terms required a shorter payment schedule didn’t get paid for 30 to 60 days.
“The new facility will help us be more current on our monthly payments. Those vendors who are owed money in six to 10 weeks will have everything cleaned up. We have had support from all of our vendors and retailers and now we are moving forward,” the ceo said.
The company locked up approval on the new facility and most of its terms in June, but hit a glitch because of a requirement that HMX’s Mumbai-based parent S. Kumars Nationwide Ltd., or SKNL, inject more cash into the operation. Without that cash infusion, HMX faced the possibility of being put on the auction block since Salus wouldn’t go forward with the facility and the existing lenders didn’t want to put up interim financing.
According to Williams, that snag has been resolved, with SKNL set to inject new capital periodically on a schedule that has been agreed on between SKNL and Salus.
SKNL and London-based Emerisque bought the old Hartmarx Corp. operations out of bankruptcy in August 2009. SKNL is the majority shareholder of HMX.
Nitin Kasliwal, chairman of HMX Group and vice chairman of SKNL, said, “This transaction is a very important step that strengthens the company’s operations.…The support of our global team in assisting the company’s efforts has been steadfast and we are confident of the continued success and growth of HMX Group’s business and brands.”
Williams insisted the reduced facility is in an amount “just right” for the current operation.
“There’s enough liquidity so that even if there’s a delay [in the cash infusion] it won’t cause a crisis or a problem with my business plan for the next three years. We’ve done a lot of work already turning around our Hickey Freeman, Hart Schaffner Marx, Bobby Jones and Coppley brands. We’re in the bottom of the eighth inning of our turnaround,” Williams said.
Industry observers have questioned whether HMX had to work on so many turnaround projects at the same time and claimed that the company perhaps overpaid for an advertising campaign created by David Lipman. Williams sees those expenditures differently.
“Everybody who saw what this company was prior to the bankruptcy understood that you couldn’t just focus on one brand. This company needed all brands to be focused on,” the ceo said.
He also emphasized that had there been no liquidity issue, he would have continued pushing on the marketing initiatives for the Hickey Freeman and Hart Schaffner Marx brands. “Consumers need to understand that these brands have been redesigned. We are targeting a younger consumer and we don’t want them to think these are their grandfathers’ brands. We will continue to invest in marketing our brands,” he said.
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