Looks like Friedman's is in financial trouble. Will anyone bail them out?
Friedman's says anticipates credit default
NEW YORK, Nov 2 (Reuters) - Friedman's Inc.
<FRDM.PK>, a jewelry retailer facing federal fraud probes, said on Tuesday
it anticipates a default under some provisions in its credit
facility.
The Savannah, Georgia-based retailer, subject of fraud
investigations by the U.S. Securities and Exchange Commission and Justice
Department, also named Richard Hettlinger as its chief financial officer. In
May, CFO Richard Cartoon resigned after five months on the job, and the company
did not name a successor at that time.
Friedman's said in a statement it
expects it will fail to meet cumulative EBITDA (earnings before interest tax
depreciation and amortization) requirements for the period ended Oct. 30, which
would constitute a default under its term loan.
The company said it also
expects to fail to meet a minimum ratio of accounts payable to inventory as of
Oct. 30, constituting a default under its term loan and revolving
loan.
The retailer said it is in talks with senior lenders on amending
its covenants to eliminate the default.
Friedman's said it expects
continued pressure on sales and EBITDA as it works on a "more prudent" credit
program, Chief Executive Officer Sam Cusano said in the statement. The company
has been working with vendors to get inventory levels back to more normal
levels, Cusano said.
11/02/04 22:28 ET
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