Hanover Direct Announces the Closing and Funding of a New Loan Facility and an Amendment of Its Existing Credit Facility Increas
12 Juillet 2004 - 11:21PM
PR Newswire (US)
Hanover Direct Announces the Closing and Funding of a New Loan
Facility and an Amendment of Its Existing Credit Facility
Increasing Liquidity by Approximately $25 Million EDGEWATER, N.J.,
July 12 /PRNewswire-FirstCall/ -- Hanover Direct, Inc. (AMEX:HNV)
today announced that it has closed and funded a $20 million junior
secured term loan facility with Chelsey Finance, LLC, an affiliate
of its controlling shareholder, Chelsey Direct LLC. The Term Loan
Facility is for a three-year term, subject to earlier maturity upon
the occurrence of a change in control or sale of the Company, and
carries an interest rate of 5% above the prime rate publicly
announced by Wachovia Bank, N.A., payable currently. The Term Loan
Facility is secured by a second priority lien on the assets of the
Company. In connection therewith, Chelsey Finance concurrently
entered into an intercreditor and subordination agreement with the
Company's senior secured lender, Congress Financial Corporation. In
consideration for providing the Term Loan Facility to the Company,
Chelsey Finance received a closing fee, which was paid in cash, and
will receive a warrant to purchase 30% of the fully diluted shares
of common stock of the Company. Pending shareholder approval of
such issuance, Chelsey Finance received a warrant to purchase a
newly-issued series of nonvoting preferred stock of the Company
that will be automatically exchanged for such common stock warrant
upon the receipt of shareholder approval of the issuance thereof,
which is anticipated at the Company's 2004 Annual Meeting of
Shareholders scheduled for August 12, 2004. In connection with the
closing of the Term Loan Facility, Chelsey Direct received a waiver
fee payable in common stock of the Company in consideration for the
waiver by Chelsey Direct of its blockage rights over the issuance
of senior securities. The terms of the Term Loan Facility with
Chelsey Finance were approved by the Company's Audit Committee, all
of whose members are independent, and the Company's Board of
Directors. Concurrently with the closing of the Term Loan Facility
with Chelsey Finance, the Company amended its existing senior
credit facility with Congress to (1) release certain existing
availability reserves and remove the excess loan availability
covenant, increasing availability to the Company by approximately
$10 million, (2) reduce the amount of the maximum credit, the
revolving loan limit and the inventory and accounts sublimits of
the borrowers, (3) defer for three months the payment of principal
with respect to the Tranche A Term Loan, (4) modify certain
provisions of the Congress Credit Facility with respect to asset
sales and the application of proceeds thereof by borrowers, (5)
extend the term of the Congress Credit Facility until July 8, 2007,
and (6) permit the secured indebtedness to Chelsey Finance arising
under the Term Loan Facility and other related transactions in
connection with the Term Loan Facility. The amendment required the
payment of fees to Congress. Together, these two arrangements have
increased the Company's liquidity by approximately $25 million.
Proceeds from the Term Loan Facility with Chelsey Finance have been
used to repay the Tranche B Term Loan of approximately $4.9 million
under the Congress Credit Facility and to pay fees and expenses in
connection with the two transactions and will provide ongoing
working capital for the Company. About Hanover Direct, Inc. Hanover
Direct, Inc. (AMEX:HNV) and its business units provide quality,
branded merchandise through a portfolio of catalogs and e-commerce
platforms to consumers, as well as a comprehensive range of
Internet, e-commerce, and fulfillment services to businesses. The
Company's catalog and Internet portfolio of home fashions, apparel
and gift brands include Domestications, The Company Store, Company
Kids, Silhouettes, International Male, Scandia Down, and Gump's By
Mail. The Company owns Gump's, a retail store based in San
Francisco. Each brand can be accessed on the Internet individually
by name. Keystone Internet Services, LLC
(http://www.keystoneinternet.com/), the Company's third party
fulfillment operation, also provides the logistical, IT and
fulfillment needs of the Company's catalogs and web sites.
Information on Hanover Direct, including each of its subsidiaries,
can be accessed on the Internet at http://www.hanoverdirect.com/.
DATASOURCE: Hanover Direct, Inc. CONTACT: Charles Blue, S.V.P.
& Chief Financial Officer of Hanover Direct, Inc.,
+1-201-272-3389; Rich Tauberman of MWW Group, +1-201-507-9500, for
Hanover Direct, Inc. Web site: http://www.hanoverdirect.com/
http://www.keystoneinternet.com/
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