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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 2, 1998
GANTOS, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 000-14577 38-1414122
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1266 E. MAIN STREET, FIFTH FLOOR, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 358-0294
N/A
(Former name or former address, if changed since last report)
Page 1 of 5 Pages
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ITEM 5. OTHER EVENTS.
On November 3, 1998, Gantos, Inc. (the "Company") announced that it
had executed a commitment letter to refinance the working capital facilities of
the Company into a $40 million facility with Foothill Capital Corporation and
Paragon Capital LLC (the "Foothill/Paragon Facility"). The Foothill/Paragon
Facility is a three year facility and will replace the Company's current $40
million facility with Fleet Bank. The consummation of the Foothill/Paragon
Facility is subject to several conditions, including documentation satisfactory
to Foothill/Paragon and the absence of a material adverse change in the
business of the Company. The Company expects, subject to the satisfaction of
these conditions, to consummate the refinancing in mid-November.
The Company also announced that it had terminated its proposed merger
with HOM Holding, Inc., the sole stockholder of Hit or Miss Inc., in accordance
with the terms of the Agreement and Plan of Merger by and among the Company,
Hit or Miss Inc. and HOM Holding, Inc. (the "Merger Agreement") previously
executed in May 1998. The termination was effective November 2, 1998.
A press release describing the Foothill/Paragon Facility and the
termination of the Merger Agreement is attached hereto as Exhibit 99.1 and
incorporated by reference herein.
This news release contains forward-looking statements, which are based
on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. Actual
results could vary materially from expected results due to a variety of
factors, including, but not limited to, the Company's ability to consummate the
Foothill/Paragon Facility financing, the Company's ability to satisfy the terms
and conditions of the Foothill/Paragon Facility, the Company's ability to stem
recurring losses from operations, the general performance of the economy,
specifically as it affects the retail apparel industry, the Company's
comparable store sales changes, the Company's ability to obtain merchandise,
and other factors applicable to the Company and its business referred to in the
Securities and Exchange Commission filings of the Company, particularly the
Company's Annual Report on Form 10-K for the year ended January 31, 1998 and
the Company's Quarterly Reports on Form 10-Q for the periods ended May 2, 1998
and August 1, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release of Gantos, Inc., dated November 3, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GANTOS, INC.
By: /s/ Arlene H. Stern
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Arlene H. Stern
President and Chief Executive Officer
Date: November 4, 1998
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INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 Press release of Gantos, Inc., dated November 3, 1998.
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GANTOS, INC.
FOR IMMEDIATE RELEASE CONTACT: 203-462-3704
GANTOS, INC. ANNOUNCES EXECUTION OF
COMMITMENT LETTER WITH FOOTHILL CAPITAL AND PARAGON CAPITAL
AND TERMINATION OF HIT OR MISS MERGER
STAMFORD, CT, November 3, 1998 -- Gantos, Inc. (Nasdaq:GTOS) announced
that it has executed a commitment letter to refinance the working capital
facilities of Gantos into a $40 million facility with Foothill Capital
Corporation and Paragon Capital LLC. The Foothill/Paragon facility is a three
year facility and will replace Gantos' current $40 million facility with Fleet
Bank. The consummation of the Foothill/Paragon facility is subject to several
conditions, including documentation satisfactory to Foothill/Paragon and the
absence of a material adverse change in the business of Gantos. Gantos expects,
subject to the satisfaction of these conditions, to consummate the refinancing
in mid-November.
Gantos also announced that it has terminated its proposed merger with
HOM Holding, Inc., the sole stockholder of Hit or Miss, in accordance with the
terms of the merger agreement previously executed in May 1998.
Arlene Stern, President & Chief Executive Officer of Gantos, stated
that "We are pleased that Foothill and Paragon have committed to financing
Gantos' operations for the next three years. The new facility contains more
favorable borrowing terms for Gantos, which in turn strengthens our financial
position and allows Gantos to continue the progress it has made in its
turnaround. The new facility will allow us to focus on growing our business,
while maintaining our vendor and landlord relationships and service to our
customers."
This news release contains forward-looking statements, which are based
on Gantos' expectations and are subject to a number of risks and uncertainties,
certain of which are beyond Gantos' control. Actual results could vary
materially from expected results due to a variety of factors, including, but
not limited to, the Company's ability to consummate the financing transaction
with Foothill, the Company's ability to satisfy the terms and conditions of the
Foothill facility, the Company's ability to stem recurring losses from
operations, the general performance of the economy, specifically as it affects
the retail apparel industry, the Company's comparable store sales changes, the
Company's ability to obtain merchandise, and other factors applicable to Gantos
and its business referred to in the Securities and Exchange Commission filings
of Gantos, particularly Gantos' Annual Report on Form 10-K for the year ended
January 31, 1998 and Gantos' Quarterly Reports on Form 10-Q for the periods
ended May 2, 1998 and August 1, 1998.
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