In recent news, Kellwood Co. announced that it was unable to renegotiate and extend its bond issue that matured Wednesday. As a result, the company’s board extended the deadline for acceptance of a proposed debt exchange until midnight Friday, July 17th.
Kellwood Co. is on the largest apparel manufacturers in the United States. It has just recently negotiated a forbearance agreement with its banking group, a team led by Bank of America. This would allow Kellwood to examining any options that could reinforce the company’s balance sheets.
Kellwood is the owner of such popular clothing lines as Phat Farm, Sag Harbor and Vince. In its current state, the company may be forced to file for bankruptcy protection should it be unable to broker an agreement with its various bondholders. This will present some unique challenges for the apparel company.
Back in February of 2008, Kellwood was taken private by the buyout firm Sun Capital Partners Inc. for $542 million. The company has been hit hard like many companies and it is reeling from the affects of tremendous debt and a sharp drop in consumer spending.
Over the last couple of months, Kellwood has made attempts to renegotiate its $140 million bond issue and carry off a debt exchange with a certain group of bondholders. This measure suffered a serious setback recently when one of the larger bondholders, Deutsche Bank AG, chose not to accept the offer Friday—even though it had previously accepted the exchange.
Kellwood’s CEO, Michael W. Kramer, suggested that the extension would provide Deutsche Bank with more time to reverse its position and “accept the deal they helped structure and told us all along that they supported.”
Kramer said, “Our operations and supply chain are strong and we are currently a profitable company.” He also indicated that debt maturity was putting pressure on the balance sheet, not Kellwood’s business performance.
Tags: debt exchange, kellwood
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