The Finish Line, Inc. said it has received two letters from UBS Loan Finance LLC and UBS Securities LLC, which have been provided to Genesco Inc. As previously announced, UBS provided The Finish Line with a commitment letter regarding financing for its proposed acquisition of Genesco.
In its September 11, 2007 letter, UBS states, among other things, “We hereby notify you that we reserve all rights with respect to our obligation to complete the financings as outlined under the commitment letter. While we will continue to pursue this matter in good faith, we are extremely concerned about the apparent deteriorating financial position of [Genesco]. We are continuing to actively monitor this situation, and look forward to your continued cooperation.”
In reviewing its concerns regarding Genesco's financial performance, UBS states, among other things, in its September 13, 2007 letter that:
“[O]ur agreement to perform under the Commitment Letter may be terminated if a Material Adverse Effect has occurred with respect to Genesco. As of today, we are not yet satisfied that Genesco has not experienced a Material Adverse Effect.
…
Based on the foregoing, we ask that you cause Genesco and its representatives and advisors to provide all financial and other information that we request so that we may conclude whether a Material Adverse Effect has occurred. As part of that effort, request that you cause Genesco to grant an expert retained by UBS unfettered access to Genesco's books and records and other financial information. In addition to the above steps, we expect your commercially reasonable efforts and active assistance to help us obtain the information we request. A list of additional requested information will follow under separate cover.
As we have done to date, we will continue to work with you in an effort to prepare documents that may be needed for any potential closing.
Please understand, however, that our efforts in doing so remain subject to a reservation of rights concerning any Material Adverse Effect.
We also continue to reserve all other rights as referenced in our letter dated September 11, 2007.”
The Finish Line sadi it does not intend to make further comments “at this time.”
However, Genesco, Inc. did have a few comments of their own regarding the UBS letter and FINL's subsequent press release on Friday afternoon.
In response to The Finish Line's announcement, Genesco Inc. issued their own release stating that it “reiterates that no 'material adverse effect' under the previously announced merger agreement with Finish Line has occurred with respect to Genesco.” Genesco went on to say that its special shareholder meeting to consider and approve the proposed merger with The Finish Line is scheduled for Monday, September 17, 2007, at 11:00 a.m. Central Daylight Time.
Finish Line said last month it would evaluate its options for the planned acquisition after Genesco posted a surprise quarterly loss. FINL has hired Moelis Advisors, a division of Mercanti Securities LLC, as a financial and capital markets adviser after Genesco's unexpected loss.
