FILING SHOWS DONNKENNY WILL WAIVE $400,000 IN LOANS TO FASHION AVENUE
WASHINGTON — Donnkenny Inc. has agreed to waive $400,000 in internal loans made to Fashion Avenue Knits now that the September acquisition has been rescinded, according to a filing Monday with the Securities and Exchange Commission.
Donnkenny will also pay Fashion Avenue Knits owner Mel Weiss $50,000 as reimbursement for legal and other fees. Weiss will also receive 25,000 shares of Donnkenny stock and warrants to purchase another 75,000 shares.
The warrants carry an exercise price of $5 per share.
Shares of Donnkenny closed Monday at 3 1/2, down 1/16 on the over-the-counter market.
On Feb. 2, as reported, Donnkenny chairman Harvey Appelle said Donnkenny had rescinded its acquisition of Fashion Avenue Knits, saying his company’s resources would be “better focused on the company’s core businesses.”
Meanwhile, a 10th shareholder lawsuit was filed in Manhattan federal court against Donnkenny Inc. and three former executives.
The suit charges that the apparel manufacturer and the three executives filed false statements with the Securities & Exchange Commission and gave misleading statements to pump up the firm’s stock price.
The suit also charges the three executives, including Richard Rubin, former president and chief executive officer, with insider trading.
The others named are Edward T. Creevy, former chief financial officer, and Ronald Hollandsworth, former controller.
The latest suit was filed by Lori Ann Reinhardt, who acquired 2,000 shares in February 1996 at 14 5/8 each.
The other nine lawsuits filed in Manhattan federal court have already been consolidated.
Shareholder lawsuits started hitting Donnkenny on Nov. 12, shortly after the company announced that its auditing committee, along with an independent counsel, was investigating some of its financial statements.
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.