STOCK PLUNGES AFTER NORTH FACE RAISES POSSIBILITY OF CH. 11 FILE
NEW YORK — Shares of The North Face kept dropping on Thursday following an announcement from the company that it might have to file for Chapter 11 bankruptcy court protection if it is unable to resolve its liquidity problems.
The troubled company on Thursday said an expired bank line facility was extended to April 15, giving North Face just a week to find a way out of its credit crunch. “Any alternative currently under consideration would result in payment to shareholders materially less than the current market price of the company’s common stock,” it said in a press release.
Shares on Thursday closed at 1 7/32, down 66.95 percent, or 2 15/32, in over-the-counter trading.
North Face added, “The company’s difficulties in meeting its loan agreement covenants and financing needs, its losses from operations and its negative working capital position raise substantial doubt about its ability to continue as a going concern.”
An inability to effect a strategic alternative, or even an extension of its bank facility, would likely result in a Chapter 11 filing, the company noted.