Wells Fargo Bank has given Tandy Brands Accessories Inc. four additional weeks to put its financing in order.
In a filing with the Securities and Exchange Commission, Dallas-based Tandy said that the deadline to negotiate a new credit facility or raise $10 million in additional equity had been moved to June 28 from the previous date of May 31.
This is the eighth amendment of the $35 million facility with Wells Fargo, which previously had given Tandy a lifeline by waiving provisions of the agreement after the men’s accessories and gift firm fell out of compliance with its profitability requirements earlier this year. Tandy said it is continuing to work with lenders on details of a new facility to replace the Wells Fargo credit arrangement, which is secured by substantially all of the assets of Tandy and its subsidiaries. The company reiterated that it had entered into “nonbinding term sheets” with lenders on a new facility.
Tandy has been struggling to remain viable since it experienced higher-than-expected returns and allowances in the gift segment of its business during the holiday season. It notified the SEC of its noncompliance with the covenant of the existing credit arrangement in February, and in March retained Deloitte Financial Advisory Services to help with its finances and operations and named Deloitte’s John Little chief restructuring officer. Among its plans are a nearly one-third reduction in the size of its workforce, a streamlining of its product offerings and annualized expense reductions of $6 million to $7 million.
Hit by a $6.7 million inventory writedown related to the holiday returns, the company suffered a net loss of $5.7 million in the three months ended Dec. 31 as sales grew 5.5 percent, to $47.9 million, on the strength of new licensed businesses such as Eddie Bauer.
Rod McGeachy, president and chief executive officer, said previously that the firm is working on “reducing our exposure to sales concessions and outsourcing our gifts distribution center to reduce both our variable and fixed expenses.”
Shares of Tandy, which fell as low as 38 cents in April, were most recently quoted at 61 cents.