KASPER MISSES BOND PAYMENT
NEW YORK — Kasper A.S.L. Ltd. said it is undergoing a liquidity crisis and didn’t make its payment to bond holders due Sept. 30.
The bridge and better sportswear maker said it has engaged in discussions with certain of its noteholders over a restructuring to address liquidity issues and enhance its ability to pursue its strategic plans, including the development of Anne Klein and Anne Klein 2, which was launched this summer. Kasper was due to make a semi-annual interest payment of $7.2 million on its 13 percent senior notes.
The firm said costs tied to the fall launch of Anne Klein 2, first shipped in July, combined with a difficult spring season for Anne Klein bridge and Kasper products, have impacted liquidity.
“Our overall business is great,” said Gregg I. Marks, president of Kasper. “The Anne Klein 2 launch has been very successful. Our bridge business has been tough, but it is getting better, and we had a very tough spring and were stuck with markdowns from the resort season.”
The company said it is current with all of its other payments to its banks and vendors, and expects to remain so. But, it said it is not in compliance with certain financial covenants under its credit facility with a group of institutions led by Chase Manhattan Bank. It is meeting with those lenders to discuss appropriate modifications to its loan agreements. Kasper announced on Friday that it was taking steps to conserve capital and restructure its financial obligations, the first such announcement from the firm since it emerged as a publicly traded company in 1997 as part of the court-ordered restructuring of its former parent company, The Leslie Fay Co., which was then in bankruptcy proceedings. Sources close to Kasper said that as part of the restructuring, the company was left with debt of about $110 million from Leslie Fay.
Marks would not discuss the specifics of Kasper’s debt, but said the the company is taking steps to address its long-term financing.
“We are liquid. This is nothing like a bankruptcy,” he said. “In order for us to expand the business in the way we want to, this current liquidity problem is something that has to be addressed, and we have to hope that most people understand that.”
Arthur S. Levine, chairman and chief executive officer, added in a statement that, “Strong reception of our new Anne Klein 2 brand at retail, and planned shipments by the company in July, August and September in the midst of what has been a sluggish department store environment, continue to give us confidence in the direction of our business. We have also weathered the trend toward more casual looks and are seeing a resurgence in our Kasper A.S.L. suit line, which is our company’s core business. The company and its financial advisers are exploring all alternatives for restructuring our debt obligations.” Hurt by a promotional selling climate at department stores and by start-up costs for the Anne Klein 2 better line, Kasper’s second-quarter losses grew to $4.7 million from $3.4 million a year ago. Sales jumped 43.1 percent to $80.2 million from $56 million, reflecting its July 1999 acquisition of Anne Klein.