Broder Bros., Co. announced that the company and its board had reached an agreement in principal on the terms of an exchange offer with an Ad Hoc Committee of the holders of its 11 1/4% Senior Notes (Existing Notes) due October 15, 2010. The exchange offer is supported by the Ad Hoc Committee comprised of holders of roughly 30% of the existing notes.
In the aggregate and with full participation, note holders would exchange $225 million in face value of Existing Notes for $100 million in senior notes maturing in 2013 and 95% of the Company's common stock with a provision for a management option program.
The ad hoc committee has been advised by Broadpoint Capital on financial issues and by Quinn Emanuel Urquhart Oliver & Hedges, LLP on legal issues.
“We are pleased to have come to these terms with the note holders. This is the next step that was contemplated when we amended our revolving credit facility with the bank group. This exchange, once completed, will reduce the Company's leverage, extend the maturity of its senior unsecured debt, decrease its cash interest expense, and enhance the company's near-term liquidity. We are gratified by the support of the Ad Hoc Committee in helping the company get here. Now we are anxious to launch and complete the exchange offer so we can devote our undivided attention to offering customers the level of inventory and service that allowed us to outperform the industry last year,” commented Tom Myers, the Company's CEO.
The company also announced that it will not make the interest payment on the Existing Notes due today. The company has until May 15, 2009, to make the payment within the grace period in the Existing Notes' indenture. Following the recent amendment to the Company's revolving credit facility, this failure to pay interest is not a default, and will not adversely affect the company's ability to borrow, under that credit facility.
Via its three divisions, Broder Bros.y distributes industry-leading brands Anvil, Fruit of the Loom, Gildan, Hanes and Jerzees as well as exclusive retail brands Adidas Golf, Champion and Columbia.