SUNLAND, Calif. — Financially troubled Cherokee Inc. reported last week that it received proposals from two investors looking to put cash into the company.
The offers come less than a month after Cherokee retained Chanin & Co., an investment banker, to examine the apparel manufacturer’s financial structure and advise on ways to improve the company’s balance sheet.
A Chanin spokesman would not identify the two investors or any other details. However, he said that the investors are currently in negotiations with Cherokee and are familiar with the company’s financial situation.
The new investors have requested concessions from Cherokee’s 11 percent senior subordinated note holders, the spokesman added. He would not elaborate on what concessions the new investors were asking for.
The senior notes represent $71.6 million, or 62.3 percent, of Cherokee’s total liabilities as of Feb. 26. The spokesman said the new investors feel “that the company has too much long-term debt.”
Cherokee, in its statement, added that neither proposal would affect the company’s trade creditors.
A spokeswomen for Georges Marciano, who is Cherokee’s largest shareholder with a 19.9 percent stake, stated that Marciano is not one of the investors.
Cherokee lost $8.5 million in the nine months ended Feb. 26, after a restructuring charge of $6.1 million. Sales slumped by some 29 percent to $85 million, reflecting the decision by the company to discontinue its private label and men’s apparel operations.
Cherokee manufactures casual apparel and footwear and licenses the Cherokee name for apparel, footwear and accessories.