Watch were you buy. Be sure they'll be there tomorrow.

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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