LESLIE FAY ASKS OK ON FINANCING FOR CH. 11 EXIT
NEW YORK — Preparing for life outside of Chapter 11, The Leslie Fay Cos. is seeking bankruptcy court approval for a $60 million exit financing agreement.
The deal, with The First National Bank of Boston and BankAmerica Business Credit Inc., would provide Leslie Fay with financing through either June 30 or the date upon which Leslie Fay’s reorganization plan is consummated, whichever is first.
The $60 million deal is 25 percent smaller than the company’s current financing facility. Leslie Fay said in court papers that it is reducing the facility to $60 million from $80 million to reflect the reorganized company’s reduced capital requirements during the period.
The women’s apparel maker said it needs a new financing deal because its current deal is set to expire on Dec. 31. Leslie Fay said it expects to have a confirmation plan confirmed in late January and consummated “sometime thereafter.”
The combined operations of Leslie Fay and Sassco are expected to show a cumulative loss before reorganization costs, interest, taxes, depreciation and amortization through the period ending Feb. 24.
Under the agreement, Leslie Fay, including Sassco, must post minimum earnings before reorganization costs, interest, taxes, depreciation and amortization (EBRITDA) totaling $7 million for the period from Dec. 31, 1995, to May 25.
As reported, Sassco will be either sold or spun off to creditors as part of Leslie Fay’s reorganization, but the time frame is not definitely set.
Operating alone, without Sassco, Leslie Fay’s cumulative loss before reorganization costs, interest, taxes, depreciation and amortization during the same period cannot exceed $2.4 million.
Without Leslie Fay, Sassco in the same period must post a cumulative EDBRITDA of $9 million.
A Leslie Fay spokesman said the bottom line targets will soon be strengthened to reflect the fact that Leslie Fay and Sassco are currently performing “particularly well.”
The improved projections mean Leslie Fay should be able to borrow money under the facility at a cheaper rate, the spokesman added. — Fairchild News Service