[LETTERHEAD WITH COMPANY LOGO AND ADDRESS]
FOR IMMEDIATE RELEASE
Contact: David E. Houseman
Chief Executive Officer
(423) 756-8146
SIGNAL APPAREL COMPANY SUBMITS
ISSUANCE OF SHARES IN CONNECTION WITH RESTRUCTURING PLAN
TO SHAREHOLDERS FOR APPROVAL AT 1997 ANNUAL MEETING
CHATTANOOGA, TENNESSEE, DECEMBER 18, 1997 - Signal Apparel
Company, Inc. (NYSE:SIA) today announced that the Company
has filed with the U.S. Securities and Exchange Commission,
and distributed to its shareholders, a definitive Notice of
Annual Meeting and Proxy Statement, dated December 12, 1997,
for its Annual Meeting of Shareholders to be held at the
Company's principal executive offices in Chattanooga,
Tennessee at 1:00p.m. on December 30, 1997. Among the items
on the agenda for approval by the Company's shareholders at
the Annual Meeting is the issuance of an additional
15,473,220 shares of the Company's Common Stock in
connection with a plan approved by the Board of Directors to
restructure the Company's presently outstanding subordinated
debt and preferred stock (the "Restructuring Plan").
In anticipation of the Restructuring Plan, the Company has
applied $20,000,000 of increased funding available under the
recent amendment and restatement of its factoring agreement
with its senior lender to reduce indebtedness owed to WGI,
LLC, a principal shareholder of the Company, thereby
reducing the Company's effective annual interest rate on
this portion of its debt from over 20% per annum to a rate
of prime plus 1 1/4% (currently 9.75%). Implementation of the
Restructuring Plan will further reduce the Company's annual
interest expense by eliminating approximately $40,000,000 of
indebtedness from the Company's balance sheet, leaving
approximately $47,000,000 owed to the senior lender and
approximately $15,791,000 owed to two principal shareholders
(including approximately $9,891,000 owed to WGI, LLC). The
Restructuring Plan also will eliminate a liability of
$11,725,000 for accrued but unpaid dividends on preferred
stock and will reduce the Company's accumulated deficit by
over 50%, from approximately $82.6 million to approximately
$34.6 million.
Commenting on the Restructuring Plan, David E. Houseman,
Chief Executive Officer, said that the Company believes the
plan will significantly enhance the implementation of
management's turnaround strategy for the Company's business,
by reducing the financial pressure on the Company's
operations through reduced interest expense and by improving
the Company's prospects for obtaining additional funding
through future issuances of debt or equity securities.
As described in greater detail in the Company's definitive
Proxy materials, features of the Restructuring Plan include:
(1) the amendment of outstanding warrants to purchase
345,000 shares of Common Stock held by WGI, LLC to reduce
the exercise price from $7.06 per share to $1.75 per share
(approximately equal to the recent market price for the
Company's Common Stock); (2) the issuance to WGI, LLC of
8,000,000 shares of Common Stock in payment for $15,831,950
of outstanding indebtedness owed by the Company to WGI, LLC
(representing a net discount on the debt repayment
approximately equal to the economic benefit of repricing the
345,000 Warrants); (3) the conversion of approximately
$24,930,000 of additional indebtedness owed by the Company
to WGI, LLC and approximately $20,514,000 in stated value
(plus accumulated dividends) of Series C Preferred Stock
held by WGI, LLC into a total of approximately 454.444
shares of a new Series F Preferred Stock, stated value
$100,000 per share; and (4) the redemption by the Company
(pursuant to its rights under a pre-existing agreement with
the holders of its Preferred Stock) of all remaining
outstanding shares (including accumulated dividends) of
Series A and Series C Preferred Stock with shares of Common
Stock valued at $7.00 per share (resulting in the issuance
of an additional 7,473,220 shares of Common Stock to another
principal shareholder, FS Signal Associates and its
affiliates). The new Series F Preferred Stock will accrue
cumulative undeclared dividends at the rate of 9% per annum,
payable in cash when declared, and will not be redeemable or
convertible into Common Stock or into any other equity
security of the Company. The definitive Proxy Statement for
the Company's 1997 Annual Meeting of Shareholders is
publicly available on the EDGAR system maintained by the
U.S. Securities and Exchange Commission, which may be
accessed through the Commission's World Wide Web site at
www.sec.gov.
Additional items on the agenda for the Company's 1997 Annual
Meeting of Shareholders include: (1) the election of seven
directors; (2) approval of an amendment to the Company's
1985 Stock Option Plan to increase the number of issuable
shares thereunder from 1,910,000 to 4,000,000; (3) approval
of the issuance of warrants to purchase up to 4,500,000
shares of the Company's Common Stock to WGI, LLC in
connection with certain additional funding and waivers under
a Credit Agreement between the Company and WGI, LLC; (4)
approval of an amendment to the Company's Restated Articles
of Incorporation increasing the number of authorized shares
of Common Stock from 40,000,000 to 80,000,000; (5) approval
of the issuance of warrants to purchase up to 250,000 shares
of the Company's Common Stock to a director/consultant; and
(vii) approval of the issuance of warrants to purchase up to
10,000 shares of the Company's Common Stock to another
director of the Company.
The Company has been informed by WGI, LLC that it intends to
vote a total of 8,607,349 shares of the Company's Common
Stock which it holds (representing approximately 50.4% of
the votes eligible to be cast by holders of the Company's
outstanding shares of Common Stock) in favor of all of the
proposals to be presented to the Company's shareholders at
the 1997 Annual Meeting. Accordingly, the Company
anticipates that each of such proposals will receive all
required approvals from the Company's shareholders at the
1997 Annual Meeting.
Signal Apparel Company and its subsidiaries, Big Ball Sports
and Grand Illusion Sportswear, design, market, and sell
activewear. The Company's activewear products feature major
professional sports league designs, popular cartoon and
movie characters, corporate brands, and the well-known Big
Ball brand. The Company's products are sold to department
stores, specialty stores, mass merchandisers, and other
retailers, distributors, and large corporate accounts. The
Company's Common Stock is traded on the New York Stock
Exchange under the symbol SIA.
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