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):
SALANT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-2433 13-3402444
(State or other (Commission File I.R.S. Employer
jurisdiction of Number) Identification No.
incorporation
1114 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)
221-7500
ITEM 5. OTHER EVENTS.
On February 28, 1995, Salant Corporation ("Salant") entered into
an agreement (the "Amendment") with The CIT Group / Commercial
Services, Inc. ("CIT") amending the Revolving Credit, Factoring
and Security Agreement, dated September 20,1993 (the "Credit
Agreement"), between Salant and CIT. The Amendment provides for,
among other things (i) an increase in the aggregate limitation
(the "Maximum Credit") on direct borrowings and letters of credit
from $120 million to a maximum of $135 million during certain
periods of 1995 (subject to an asset based formula), (ii) an
increase in the rate of advance of "Eligible Inventory" (as
defined in the Credit Agreement) used to calculate the asset
based formula from fifty percent (50%) to sixty percent (60%)
during March, April, May and June 1995 together with an increase
in the "Inventory Sublimit" (as defined in the Credit Agreement)
from $60,000,000 to $70,000,000 during such months, (iii) an
extension of the term of the Credit Agreement by one year ending
on September 20, 1996, (iv) an increase in the interest rate on
direct borrowing from an annual rate of one-half of one percent
in excess of the prime rate of Chemical Bank (the "Prime Rate")
to one percent in excess of the Prime Rate, (v) a modification of
certain financial covenants contained in the Credit Agreement,
and (vi) a continuation of certain factoring services by CIT.
Salant's business is seasonal in nature. As a result, Salant's
working capital requirements increase significantly during the
first three quarters of each year. As discussed in Salant's
Quarterly Report on Form 10-Q for the period ended October 1,
1994, Salant anticipated the need to borrow funds during certain
periods of 1995 in excess of the $120 million Maximum Credit
limitation under the Credit Agreement, as a result of projected
increased sales growth in 1995. The Amendment provides for,
among other things, the borrowing capacity to support Salant's
planned growth for 1995.
As a result of a higher than anticipated loan balance at the end
of the 1994 fiscal year, Salant's requirement to borrow funds in
excess of the $120 million Maximum Credit commences one month
earlier (in March 1995 rather than the second quarter of 1995),
than previously expected. In addition, Salant anticipates the
need to borrow funds during certain periods in 1995 in excess of
the asset based formula contained in the Credit Agreement, prior
to the Amendment. The increase in the rate of advance on
Eligible Inventory and the increase in the Inventory Sublimit
contained in the Amendment provide Salant with sufficient
borrowing capacity to support its projected needs in 1995 under
the asset based formula set forth in the Credit Agreement.
Although not currently anticipated based on its projected
requirements for 1995, if Salant needs to borrow funds in excess
of the asset based formula, the Credit Agreement provides for, in
the sole discretion of CIT, up to $15 million in "Seasonal
Overadvance" (as defined in the Credit Agreement). There can be
no assurance, however, that CIT would agree to provide Salant
with funds under the Seasonal Overadvance.
Pursuant to the Amendment, the Maximum Credit at the end of each
month in 1995 is as follows:
Month Maximum Credit
(in millions)
February $120
March $132
April $135
May $130
June $130
July $130
August $132
September $128
Thereafter $120
The Amendment also provides for a modification of financial
covenants relating to (i) working capital, (ii) stockholders'
equity, (iii) liabilities to stockholders' equity ratio, (iv)
fixed charge coverage ratio and (v) maximum loss. In the absence
of the Amendment, Salant (i) would not have been able to satisfy
the fixed charge coverage ratio for its 1994 fiscal year and (ii)
may not have been able to meet the other four covenants described
above for certain periods during 1995, commencing April 1995.
Based upon its analysis of its consolidated financial position,
its cash flow during the past twelve months, and its cash flow
anticipated from future operations, Salant believes that its cash
flow, together with the funds available under the Credit
Agreement, as amended, will be adequate to meet its financial
requirements for the balance of 1995. There can be no assurance,
however, that future developments and general economic trends
will not adversely affect the Company's operations and, hence,
its anticipated cash flow.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS
Number Description
10.48 Third Amendment to Credit Agreement, dated February 28, 1995,
to the Revolving Credit, Factoring and Security Agreement, dated
September 20, 1993, as amended, between The CIT
Group/Commercial Services, Inc. and Salant Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SALANT CORPORATION
Date: March 2, 1995 /s/Nicholas P. DiPaolo
Nicholas P. DiPaolo
Chairman, President
and Chief Executive Officer
THIRD AMENDMENT TO CREDIT AGREEMENT
THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of
February 28, 1995 (this "Amendment"), to the Revolving Credit,
Factoring and Security Agreement, dated as of September 20, 1993,
as amended by letter agreement Re: Amendment to Credit Agreement
with respect to the Mississippi Property, dated June 14, 1994
(the "First Amendment") and by letter agreement Re: Amendment to
Credit Agreement with respect to Additional Guarantors, dated
August 24, 1994 (the "Second Amendment") (as so amended, and as
further amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), between THE CIT GROUP/COMMERCIAL
SERVICES, INC. ("Lender") and SALANT CORPORATION ("Borrower").
W I T N E S S E T H :
WHEREAS, Lender and Borrower are parties to the
Credit Agreement;
WHEREAS, Borrower has requested Lender to amend the
Credit Agreement to increase the Maximum Credit and the Revolving
Loan Limit as defined therein and extend the Renewal Date as
defined therein; and
WHEREAS, Lender is willing to make such amendments to
the Credit Agreement upon the terms and subject to the conditions
set forth in this Amendment;
NOW, THEREFORE, ln consideration of the premises, the
parties hereto hereby agree, effective as of the Effective Date,
as defined below, as follows:
1. Defined Terms. Initially capitalized terms used
and not otherwise defined herein shall have their respective
meanings as defined in the Credit Agreement.
2. Amendment of Section 1.8. The entire text of
Section 1.8 of the Credit Agreement beginning with the phrase
"Average Maturity Date" is deleted in its entirety and the phrase
"Intentionally Deleted" is substituted therefor.
3. Amendment of Section 1.35. Section 1.35 of the
Credit Agreement is amended ln its entirety to read as follows:
"1.35 'Factored Accounts' shall mean Accounts of
all
divisions of Borrower currently factored by Lender,
including, but not limited to, Borrower's Perry Ellis division,
Salant Accessories division, Vera Scarves division, Made in the
Shade/West Dallas division, and Fashion Shirt Group division, but
excluding all such Accounts (i) of Borrower's Manhattan Factory
Outlet Stores division, (ii) arising from sales to any
Subsidiary, division or Affiliate of Borrower (other than an
Apollo Affiliate), or (iii) which Borrower ceases to factor with
Lender pursuant to the terms of this Agreement."
4. Amendment of Section 1.47. Section l.47 of the
Credit Agreement is amended in its entirety to read as follows:
"1.47 'Interest Rate' shall mean a rate of one
percent (1%) per annum in excess of the Prime Rate (as
defined herein) or, upon and after declaration by Lender of
any Event of Default (so long as such Event of Default is
continuing and unwaived) or upon termination or non-renewal
hereof, a rate of two percent (2%) per annum in excess of
the Prime Rate."
5. Amendment of Section 1.58. The entire text of
Section 1.58 of the Credit Agreement beginning with the phrase
"Net Proceeds" is deleted in its entirety and the phrase
"Intentionally Deleted" is substituted therefor.
6. Amendment of Section 1.74. Section l.74 of the
Credit Agreement is amended in its entirety to read as follows:
"1.74 Revolving Loan Limit shall mean the dollar
amount in effect from time to time under the Maximum
Credit."
7. Amendment of Section 3.1(a)(i). Section 3.1(a)(i)
of the Credit Agreement is amended in its entirety to read as
follows:
"(i) Eighty-five percent (85%) of the amount of
Net Sales in respect of Factored Accounts prior to the
collection thereof, plus"
8. Amendment of Section 3.1(a)(iii). Section
3.1(a)(iii) of the Credit Agreement is amended in its entirety to
read as follows:
"(iii) Fifty percent (50%) of the value of
Eligible Inventory, provided, however, that solely for, and
at all times during the months of March, April, May and June of
1995, such advance rate shall be sixty percent (60%) of the value
of Eligible Inventory"
9. Amendment of Section 3.1(c). Section 3.1(c) of
the Credit Agreement is amended in its entirety to read as
follows:
"(c) Notwithstanding anything to the contrary
contained herein or in any of the other Financing
Agreements, except in Lender's discretion, the aggregate unpaid
principal amount of Revolving Loans outstanding at any time based
on the value of all Eligible Inventory shall not exceed
$60,000,000 (the "Inventory Sublimit"), provided, however, that
solely for, and at all times during the months of March, April,
May and June of 1995, the Inventory Sublimit may equal but shall
not exceed $70,000,000. On or before July 10, 1995, Borrower
shall pay in full to Lender that portion of the Revolving Loans
which is equal to the difference (such amount, the "Inventory
Overadvance") between: (i) the aggregate amount of Revolving
Loans then outstanding with respect to Eligible Inventory, and
(ii) the lesser of: (A) the maximum amount of Revolving Loans
with respect to Eligible Inventory to which Borrower is entitled
on July 1, 1995, based on an advance rate of fifty percent (50%)
of the value of Eligible Inventory, and (B) the Inventory
Sublimit as in effect on July 1, 1995. Borrower's failure to pay
the Inventory Overadvance in full on or before July 10, 1995,
shall constitute an Event of Default under Section 8.1(a) of this
Agreement."
10. Amendment of Section 3.3. Section 3.3 of the
Credit Agreement is amended in its entirety to read as follows:
"3.3 Maximum Credit
The aggregate principal amount of the Revolving Loans
and Letter of Credit Accommodations at any time outstanding
(the "Maximum Credit") shall not exceed $120,000,000, provided,
however, that solely for, and at all times during the months of
March, April, May, June, July, August and September of 1995, such
outstanding amount shall not exceed the amount set forth below
opposite each such month, and provided further, however, that
during the first twenty (20) days of each month, the Maximum
Credit may equal but shall not exceed the higher of (i) the
Maximum Credit on the
last day of the immediately preceding month or (ii) the
amount set forth below opposite such month:
Month Amount
March $132,000,000
April $135,000,000
May $130,000,000
June $130,000,000
July $130,000,000
August $132,000,000
September $128,000,000
Notwithstanding anything to the contrary contained herein,
the Maximum Credit as of October 21, 1995 and thereafter shall
not exceed $120,000,000."
11. Amendment of Section 3.6(d). (a) The last
sentence of Section 3.6 (d) of the Credit Agreement is deleted
and the following is substituted therefor:
"Net Sales factored with Lender each month shall be
posted to Borrower's account as of the date Lender
receives confirmatory assignment schedules. All checks
and other amounts received by Lender in respect of
Factored Accounts in the form of remittances which are
not immediately available will be credited to
Borrower's account three (3) business days after such
remittances have been received."
(b) The following shall be added at the end of
Section 3.6 (d) of the Credit Agreement as amended by clause (a)
of this paragraph 11:
"The Net Sale amount of any Factored Account shipped at
Lender's Credit Risk, which remains unpaid due solely
to Credit Risk, will be credited to Borrower's account:
(i) as of the date of the Factored Account's longest
maturity, if such customer: makes an
assignment for the benefit of creditors; files or has filed
against it a petition under any bankruptcy or insolvency act;
calls a meeting of its creditors; institutes any proceeding to
compromise or adjust its debts; or if any proceeding is
instituted by or against such customer for relief under any state
or federal bankruptcy or insolvency law; or if a receiver or
trustee is appointed for the customer; or
(ii) if requested by Borrower and if agreed to by
Lender in the exercise of its discretion, as of the 90th day
following the Factored Account's maturity date, if such Factored
Account remains unpaid as of said date without the happening of
any of the events specified in clause (i) hereinabove.
Should it subsequently be determined that any such Factored
Account credited to Borrower's account pursuant to this Section
3.6(d) remained unpaid due to any reason other than Credit Risk,
Lender shall have the right to reverse the credit, and debit
Borrower's account accordingly."
12. Amendment of Section 3.6(i). The entire text of
Section 3.6(i) of the Credit Agreement is deleted in its entirety
and the phrase "Intentionally Deleted" is substituted therefor.
13. Amendment of Section 3.6(k). The first sentence
of Section 3.6(k) of the Credit Agreement is amended in its
entirety to read as follows:
"After the Renewal Date, Borrower shall have the
right to cease factoring the Accounts of any of its
divisions or other operating units upon not less than sixty (60)
days prior written notice to Lender, provided, however, that all
Accounts shall at all times constitute security for all
Obligations."
14. Amendment of Section 7.18. Section 7.18 of the
Credit Agreement is amended in its entirety to read as follows:
"7.18 Working Capital
Borrower shall not at the end of any fiscal month
permit its consolidated working capital to be less than
$8O,OOO,OOO during the period from the Consummation Date through
the day before the last day of its 1993 fiscal year, $85,000,000
from the last day of its 1993 fiscal year through the day before
the last day of its 1995 fiscal year, and $95,000,000
thereafter."
15. Amendment of Section 7.19. Section 7.19 of the
Credit Agreement is amended in its entirety to read as follows:
"7.19 Stockholders' Equity
Borrower shall not permit its consolidated
stockholders' equity to be less than $55,000,000 during the
period from the Consummation Date through the day before the last
day of its 1993 fiscal year, $60,000,000 through the period from
the last day of its 1993 fiscal year through the day before the
last day of its 1994 fiscal year, $65,000,000 through the period
from the last day of its 1994 fiscal year through the day before
the last day of its 1995 fiscal year, and $75,000,000
thereafter."
16. Amendment of Section 7.20. Section 7.20 of the
Credit Agreement is amended in its entirety to read as follows:
"7.20 Total Liabilities to Stockholders' Equity Ratio
Borrower shall not permit the ratio of the
aggregate amount of its consolidated total liabilities to the
aggregate amount of its consolidated stockholders' equity to
exceed 3.25:1.00 at the end of its 1993 fiscal year and 3.00:1.00
at the end of each fiscal year thereafter."
17. Amendment of Section 7.21. Section 7.21 of the
Credit Agreement is amended ln its entirety to read as follows:
"7.21 Fixed Charge Coverage Ratio
Borrower shall not permit the ratio of (a) the
sum of (i) the consolidated net income (including royalty income)
from continuing operations (excluding any unusual or
non-recurring items of income or expense) before interest and
taxes of Borrower and its Subsidiaries during any computation
period and (ii) the consolidated depreciation and amortization
expenses of Borrower and its Subsidiaries for such computation
period to (b) the sum of (I) the consolidated interest expense
(including all imputed interest on capital lease obligations) of
Borrower and its Subsidiaries and (II) the aggregate amount of
all scheduled repayments of Indebtedness (other than the
Obligations) by Borrower and its Subsidiaries during the
computation period,
to be less than 1.5:1.0 for its 1993, 1994 and 1995 fiscal
years, and 2.0:1.0 for each fiscal year thereafter."
18. Amendment of Section 7.22. The following
shall be added at the end of Section 7.22 of the Credit
Agreement:
"Notwithstanding anything to the contrary
contained herein, any write-off for goodwill in the Borrower's
1994 fiscal year shall not be included for purposes of
calculating net loss under this Section 7.22."
19. Amendment of Section 10.1(a). Section 10.1(a) of
the Credit Agreement is amended in its entirety to read as
follows:
"10.1 Term
(a) This Agreement and the other Financing
Agreements shall become effective as of the date hereof and
shall continue in full force and effect for a term ending on
September 30, 1996 (the "Renewal Date") and from year to
year thereafter, unless sooner terminated pursuant to the
terms hereof."
20. Representations and Warranties. Borrower hereby
represents and warrants to Lender that the representations and
warranties set forth in Section 6 of the Credit Agreement are
true on and as of the date hereof as if made on and as of the
date hereof after giving effect to this Amendment, except to the
extent any such representation or warranty expressly relates to a
prior date, and breach of any of the representations and
warranties made in this paragraph shall constitute an Event of
Default under Section 8.1(b) or 8.1(c) of the Credit Agreement,
as applicable. Borrower further represents and warrants that,
after giving effect to this Amendment, no Event of Default or
event which, with the lapse of time or the giving of notice or
both, would become an Event of Default has occurred and is
continuing.
21. Effectiveness. This Amendment shall become
effective on the date (the "Effective Date") Lender shall have
received each of the following:
a. Counterparts of this Amendment, duly executed and
delivered by Borrower and Lender.
b. A copy of resolutions, in form and substance
satisfactory to Lender, of the Board of Directors
of Borrower authorizing the execution, delivery
and performance of this Amendment and the
borrowings contemplated hereunder, certified by
the Secretary or Assistant Secretary of Borrower
as of the date hereof, which certificate shall state that the
resolutions thereby certified have not been amended, modified,
revoked or rescinded, shall certify the names and true signatures
of Borrower's officers authorized to execute this Amendment and
any other documents to be delivered by Borrower hereunder and
further certify that the Amended and Restated Certificate of
Incorporation has not been altered since September 20, 1993 and
that attached to such certificate is a complete and correct copy
of the by- laws of Borrower as in effect on the date hereof.
c. A duly executed copy of the Consent of Guarantors
substantially in the form of Exhibit A hereto.
d. Certificates of good standing from the Secretaries
of State of the Borrower's State of Incorporation, Alabama,
Arkansas, Georgia, Michigan, New York, South Carolina, Tennessee
and Texas, each such certificate to be dated a date not more than
thirty (30) days prior to the date hereof.
e. An opinion of in-house counsel to Borrower, in
form and substance satisfactory to Lender and its
counsel, as to the due authorization, execution, delivery and
enforceability of this Amendment and such other matters, as
Lender may reasonably request.
f. Such other documents as Lender may reasonably
request.
22. Continuing Effect of Credit Agreement. This
Amendment shall not constitute a waiver or amendment of any
provision of the Credit Agreement not expressly referred to
herein and shall not be construed as a consent to any further or
future action on the part of Borrower that would require consent
of Lender. Except as expressly amended, the provisions of the
Credit Agreement are and shall remain in full force and effect.
23. Counterparts. This Amendment may be executed in
counterparts, and all of such counterparts taken together shall
be deemed to constitute one and the same instrument.
24. Governing Law. This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of
the state of New York.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered in New York, New
York by their proper and duly authorized officers as of the day
and year first above written,
THE CIT CROUP/COMMERCIAL
SERVICES, INC.
By:/s/Richard Romer
Title:Executive Vice-President
SALANT CORPORATION
By:/s/ Nicholas P. DiPaolo
Title: Chairman, President
and Chief Executive Officer
EXHIBIT A
CONSENT OF GUARANTORS
Each of the undersigned, Clantexport, Inc., Denton
Mills, Inc., Frost Bros. Enterprises, Inc., SLT Sourcing, Inc.
(formerly named, Sea Isle Sportswear, Inc.), Vera Licensing,
Inc., Salant Canada Inc. and J.J. Farmer Clothing Inc., each a
Guarantor under its respective Guarantee, each dated as of
September 20, 1993 (individually, its "Guarantee"), made in favor
of The CIT Group/Commercial Services, Inc. ("Lender"), pursuant
to the Credit Agreement as defined in the Third Amendment to
Credit Agreement, dated as of February 28, 1995 between Lender
and Salant Corporation (the "Amendment"), to which this Consent
is attached, hereby consents to the Amendment and the matters
contemplated thereby, and hereby confirms and agrees that its
Guarantee is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects except that,
on and after the effective date of the Amendment, each reference
in its Guarantee to "the Credit Agreement" "thereunder",
"thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement
as amended by the Amendment.
IN WITNESS WHEREOF, each of the undersigned has caused
this Consent of Guarantors to be duly executed and delivered by
its authorized officer this 28 day of February, 1995.
CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC.
By:________________ By:___________________
Title:_____________ Title:________________
DENTON MILLS, INC. SLT SOURCING, INC.
By:________________ By:___________________
Title:_____________ Title:________________
VERA LICENSING, INC. SALANT CANADA INC.
By:________________ By:___________________
Title:_____________ Title:________________
J.J. FARMER CLOTHING INC.
By:___________________
Title:________________
