Hartmarx Corporation (NYSE: HMX) announced that it has entered into a new $200 million senior revolving credit facility effective as of August 30, 2002. The facility has a three and one-half year term with an additional one-year renewal at the Company's option, and also provides for a $50 million letter of credit subfacility. It has been fully underwritten by Congress Financial Corporation, a wholly-owned subsidiary of Wachovia Bank. Syndication to other financial institutions is expected to be completed shortly.
Homi Patel, president and chief executive officer stated, "Our significant progress this year in debt reduction and improved operating performance has enabled us to enter into this new arrangement well in advance of the June, 2003 maturity of our former facility. This new facility provides Hartmarx with additional borrowing availability, lower interest rates, the immediate repayment of a high-cost term loan of $15 million, the flexibility to retire our $25 million of senior unsecured notes prior to their September, 2003 maturity, and elimination of several financial covenants. Entering into this new facility well ahead of schedule and having sufficient availability to pay off our notes prior to September, 2003, is an important milestone in accomplishing our long-term objectives. We continue to anticipate a profitable second half and full year with a major improvement in earnings for 2003."
The current interest rate on borrowings under the new facility is approximately 4.5%, compared to 6.75% under the former facility, 10.25% for the former $15 million term loan and 12.5% for the $25 million face value of the unsecured notes outstanding. The interest rate under the new facility is based on LIBOR as the benchmark rate and on the level of excess availability. Eligible receivables and inventories provide the principal collateral for the borrowings.
This refinancing will result in a non-cash extraordinary charge, net of income tax benefit, of approximately $1.7 million, or $.05 per share, which will be reflected in the Company's third fiscal quarter ending August 31, 2002.
Hartmarx produces and markets business, casual and golf apparel under its own brands including Hart Schaffner & Marx, Hickey-Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch, Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In addition, Hartmarx has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberrys men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone, Pierre Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs.
The comments set forth above contain forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements could be significantly impacted by such factors as the level of consumer spending for men's and women's apparel, the prevailing retail environment, the Company's relationships with its suppliers, customers, licensors and licensees, actions of competitors that may impact the Company's business and the impact of unforeseen economic changes, such as interest rates, or in other external economic and political factors over which the Company has no control. The reader is also directed to the Company's periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company's results of operations and financial condition. Forward-looking statements are not guarantees as actual results could differ materially from those expressed or implied in forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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