NEW YORK — Wilsons The Leather Experts Inc. is negotiating the terms of a proposed agreement that would allow it to raise $35 million in exchange for a 49 percent equity stake in the company.

Under the proposal, Wilsons would issue 3,500 shares of its series “A” preferred stock to two institutional investors. Each share would be priced at $10,000. But at the transaction’s closing, the preferred shares would be convertible immediately into shares of the company’s common stock at a conversion price of $1.69 per share.

Mathematically, the 3,500 preferred shares would convert to 20 million shares of common stock, or 49 percent of the total equity stake, according to Financo Inc.

Financo and its affiliate, CVF Securities, represent Wilsons in the transaction.

According to Gilbert Harrison, chairman of Financo, the terms that are being negotiated would represent only an equity stake, and does not grant to the potential investors any seat on the board. Wilsons has been busy getting its financial house in order.

The company has an amended revolving credit facility that waives defaults under the previous agreement’s covenants and resets certain financial covenants for future time periods. The firm said it will file a notice of late filing of its annual report because the ongoing negotiations were not completed before the requisite time period.

— Vicki Young

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