MAIDENFORM: BANKS NEAR COMMITMENT ON EXTENSION
Byline: Thomas J. Ryan
NEW YORK — Maidenform Worldwide Inc. is close to getting a final commitment from its banks to extend its financing through the second quarter of 1997.
The current line of credit is scheduled to expire in the middle of January.
Asked for an update late last week on the privately owned company’s financial position, Elizabeth J. Coleman, chairman and chief executive officer, who acknowledged earlier this year that the company had been feeling a cash crunch, said: “We are getting very strong support from our lenders [on an extension]…we should know very shortly.”
Coleman added, “I think it’s very important to note that we are seeing significant increases from our spring bookings, and we are trying more actively to reduce operating costs.”
Frank B. Stull, Maidenform’s executive vice president and chief financial officer, added that banks have agreed to extend the agreement beyond the current term.
“We are doing the paperwork as we speak,” Stull said.
Stull also noted that Maidenform is still working on finding ways to recapitalize the company’s large debt load to improve the overall liquidity of the company. However, he maintained that its current banker support has been strong.
“Our lenders have been pleased with the actions we are taking to improve customer service and become a more cost-effective competitor,” Stull said.
He also maintained the company’s order position was strong and said demand for the company’s product is “extremely good.”
“There are some customer service issues that we are resolving, but quite frankly the demand for our product is so strong we are unable to keep up with production. The fundamental franchise is great and many areas have not been tapped. I think everyone in the company is confident.”
Asked about retailer complaints concerning slow deliveries of Maidenform’s Trueform shapers, Coleman said, “We’ve had some issues on deliveries, as have other companies….Trueform deliveries are getting better.”
Meanwhile, claims against Maidenform are trading at ranges between 85 cents to 90 cents on the dollar as a result of concerns about the company’s ability to refinance its heavy debt load, according to sources.
Insurance firms holding Maidenform paper obtained through private placements reportedly have sold their entire block of claims amounting to $26.3 million in the range of 85 to 90 cents on the dollar to M.J. Whitman & Co., which trades claims in distressed firms.
In addition, sources said, one of Maidenform’s eight banks has sold its $11 million claim, also to M.J. Whitman.
Officials at M.J. Whitman declined comment.