DONNKENNY AND BANKERS REACH NEW AGREEMENT
NEW YORK — Donnkenny Inc. said its bankers have waived certain defaults under its credit agreement until April 30 and hiked its credit line.
The sportswear manufacturer, rocked by an accounting scandal in November, said its senior lenders — Chase Manhattan Bank, Bank of New York, and Fleet Bank — increased its credit line to $70 million from $58 million. Under the new agreement, the company can tap $45 million in direct borrowings and $25 million in letters of credit.
The waiver agreement was extended to April 30 from Feb. 27.
“The new bank agreement advances the steps the company has undertaken to maintain the stability of day-to-day operations and restore Donnkenny’s financial credibility,” said Harvey Appelle, the firm’s chairman since Dec. 18. Appelle succeeded Richard Rubin, who resigned and is now facing lawsuits charging insider trading.
Donnkenny also said that it has reached an agreement with the former owner of Fashion Avenue Knits to rescind its previously announced acquisition of the maker of sweaters and other knits for juniors.
Appelle mentioned that Donnkenny’s resources would be “better focused on the company’s core businesses.” Donnkenny had acquired Fashion Avenue Knits in September and said at the time that it was expected to add about $40 million to Donnkenny’s volume in 1997.
Donnkenny makes sportswear and sleepwear featuring licensed Looney Tunes and Walt Disney characters and brands such as Beldoch Popper, Pierre Cardin, Victoria Jones and Casey & Max.