CHICAGO, Jan 23, 2009 /PRNewswire via COMTEX/ -- Company Receives Commitment for $160 Million in DIP Financing
Hartmarx Corporation (HTMX), today announced that it and its domestic U.S. subsidiaries have filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code. In conjunction with the filing, the Company's existing lenders have ratified and re-affirmed up to $160 million of pre-petition commitments as a debtor-in-possession (DIP) credit facility. The DIP facility, subject to additional terms and conditions, provides immediate liquidity while the Company pursues strategic alternatives, enabling the Company to pay vendors for goods and services received after the filing. In addition, Hartmarx is seeking customary authority from the U.S. Bankruptcy Court to continue operating its business in the ordinary course, including the authority to make wage and salary payments and to continue various benefits for employees.
The filing is principally the result of the substantial decline in discretionary apparel purchases by consumers and by the Company's retail customers, particularly at the luxury price points, coupled with the significant contraction in borrowing capacity under the Company's senior credit facility. In addition, the contraction in the credit markets has precluded the Company's ability to obtain financing from alternative sources. The Company intends to continue operating its business in the normal course as management focuses on developing and executing a restructuring plan, which may include the sale of substantially all of its assets.
Homi Patel, chairman and chief executive officer of Hartmarx, commented, "We believe that today's filing and our DIP financing provide us with sufficient funding and allows us to operate our business currently as we pursue strategic alternatives. In that regard, we have retained Moelis & Company, LLC as our financial advisor to evaluate strategic and financing alternatives, including the identification of potential parties to invest in or acquire the Company."
Mr. Patel noted that the Chapter 11 filing and DIP financing should facilitate a return to more normal day-to-day business operations. "Hartmarx has been producing high quality clothing for over 125 years. As we pursue strategic alternatives, we will continue to provide the same high quality apparel under the same well-known and trusted brands. Furthermore, we will continue to be committed to our employees, suppliers, and customers. With our DIP financing, the relief we have requested in the Bankruptcy Court, and the protections provided under Chapter 11 for post-petition purchases, we are confident that our employees, suppliers, and customers will continue to support us during this period," Mr. Patel concluded.
The Company's Canadian and other non-U.S. affiliates have not sought bankruptcy protection.
Hartmarx produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the Company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. 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. Such forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "should" or "will" or the negatives thereof or other comparable terminology. Forward-looking statements are not guarantees as actual results could differ materially from those expressed or implied in such forward-looking statements. 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, possible acquisitions 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. 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.
SOURCE Hartmarx Corporation