DYERSBURG REACHES DEBT FORBEARANCE AGREEMENT
NEW YORK — Knit-fabrics mill Dyersburg Corp. saw its losses widen in the second quarter and fell into default with its lenders. However, the Charlotte, N.C., company has entered into a forbearance agreement to keep its credit open through August.
For the three months ended April 1, Dyersburg recorded a net loss of $4 million compared with a $2.7 million loss in the prior-year quarter, according to a 10-Q filed with the Securities and Exchange Commission on Tuesday. Sales were $78.7 million, off 1.8 percent from $80.1 million.
A decline in fabric sales, caused by lower average selling prices, was offset by the company’s developing full-package garment production business. The fledgling garment business contributed $6.3 million in sales for the quarter, compared with nothing last year, but took $2.1 million in operating losses.
The company attributed those losses to needing larger quantities of fabric than it had expected to produce contracted garments.
The textile segment produced $2 million in operating income, off 16.8 percent from $2.4 million last year. Textile sales were $72.4 million, down 9 percent from $80.1 million.
Chairman and chief executive officer T. Eugene McBride contended in a statement that, overall, Dyersburg’s business was improving.
“However, our long-term debt issues, along with some operational inefficiencies, have held us back from reaching our full potential,” he said. “We have begun to take some aggressive steps to address our operational inefficiencies and are actively working with our financial advisers to address our debt issues.”
The company said in the filing that its failure to meet targeted levels of earnings before interest, taxation, depreciation and amortization for the first half of the year had left it in default on its credit agreement. Last Friday, Dyersburg entered into a forbearance agreement under which its lenders agreed to extend its revolving loans and letter of credit until Aug. 25, provided the company makes EBITDA of $5 million in the three months ending July 1 and another $2 million in EBITDA in the month ending July 29.
A spokesman for the company declined to disclose Dyersburg’s EBITDA for the second quarter.
Dyersburg said in a statement it had hired the financial advisory firm Houlihan Lokey Howard & Zukin to develop “strategic alternatives related to restructuring its long-term indebtedness.” It noted that it was seeking options that “will leave trade creditors unimpaired.”
For the six months, Dyersburg reported a $4.6 million loss compared with a $4.3 million loss in the year-ago period. Textile-segment operating earnings were $7.8 million, up 38.9 percent from $5.6 million a year ago, while the garment segment recorded a $3 million operating loss.
Sales were $147.1 million, off 5.4 percent from $155.5 million. A 12.3 percent slip in textile sales, to $136.3 million, was partly offset by $10.8 million in garment sales.