Tropical Sportswear Intl Corporation has filed for voluntary Chapter 11 bankruptcy protection and entered into an asset purchase agreement with Perry Ellis International, Inc., to be acquired pursuant to section 363 of the U.S. Bankruptcy Code.
TSI also announced it has secured a new $50 million debtor-in-possession credit facility (“DIP”) with The CIT Group and Fleet Capital, the company’s senior lenders, to finance its working capital needs and allow business operations to continue as normal during the sale process, including meeting obligations to employees, vendors and others.
Under the terms of the asset purchase agreement, which is subject to the consent of TSI’s creditors, higher or better offers, Hart Scott Rodino antitrust clearance, Bankruptcy Court approval, and other customary closing conditions, PEI would pay $85 million in cash to acquire substantially all of TSI’s accounts receivable, inventory, intellectual property, certain real property and other specified assets, as well as the outstanding capital stock of TSI’s European subsidiary, Farah Manufacturing (U.K.) Limited, and would assume certain operating liabilities of TSI.
“TSI has been an important player in the men’s apparel industry for several decades,” said Mike Kagan, chief executive officer of TSI. “As the industry navigates a period of dramatic change, it has become necessary for domestic companies to take major steps to ensure their ability to remain competitive in an evolving global marketplace. We believe that a business combination with Perry Ellis, which has expressed a commitment to building and growing its men’s pants business, is in the best interests of our customers and stakeholders.
“The ongoing support from our existing lenders through our new DIP facility will allow us to continue business operations as normal as we move forward with the sale process,” Kagan continued. “We will do everything possible to ensure that there is no disruption in the quality of service we provide to our customers during this transition period and that our obligations to employees, vendors and others are met.”
The voluntary Chapter 11 petition was filed in the United States Bankruptcy Court for the Middle District of Florida. The Bankruptcy Court supervised sale approval process is expected to be completed during the first quarter of 2005. TSI has retained Alvarez & Marsal as financial advisors and Akerman Senterfitt as bankruptcy counsel. PEI is being advised on the sale by Greenberg Traurig, LLP.