Perry Ellis International, Inc. exercised the call provision of the $57 million 9 1/2 Senior Secured Notes to redeem these notes effective March 15, 2006.
The company indicated that it expects annual interest expense savings of approximately $1.5 million as a result of lowering its overall cost of capital from this transaction. The company expects to utilize its $175 million revolving senior credit facility and cash flow from operations to redeem the senior secured notes. As of January 31, 2006, the company had approximately $40 million of borrowings outstanding on its $175 million revolving senior credit facility.
The call provision as of March 15, 2006 permits the bonds to be redeemed at a premium of 102.375%, and the company expects to incur debt extinguishment costs of approximately $3.0 million during the first quarter of fiscal 2007 in connection with this action, including call premium costs, write-off of bond issue costs and costs associated with the termination of derivatives related to the senior secured notes.
George Feldenkreis, Chairman & CEO commented: “We are pleased that our strong cash flow allows us to take advantage of this opportunity to reduce our overall cost of capital. During the year ended January 31, 2006 as a result of the February 2005 Tropical Sportswear and January 2006 Gotcha acquisitions, we funded approximately $95 million of acquisitions from our credit facility. Despite this, as a result of our strong cash flow from operations and working capital management we were able to repay approximately $65 million of these borrowings. This demonstrates our ability and commitment to generate strong cash flow.”
