<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of Earliest Event Reported) June 18, 1999
--------------------------
APPAREL VENTURES, INC.
--------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
DELAWARE 95 - 4475766
-------- ------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
204 WEST ROSECRANS, GARDENA, CALIFORNIA 90248
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(310) 538 - 4980
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS
The Company has reported to its bank that for the period ended April
30, 1999 the Company was not in compliance with certain of its covenants under
its loan agreement, which constitutes an event of default. The bank has rejected
the Company's request for a waiver for the event of default and has exercised
certain rights under the loan agreement, including a reduction of the credit
limit from $32 million to $18 million, elimination of inventory from the
borrowing base formula, and elimination of the seasonal overadvance provision of
the loan which makes additional funds available from August through March.
The actions of the bank have triggered a tightening of trade credit
from vendors. Most vendors have placed the Company on a cash-with-order or
cash-before-delivery basis. The Company is rationing its cash reserves to meet
current obligations.
The bank has further indicated to the Company that it may exercise
further rights under the loan agreement should the Company fail to reach a
satisfactory debt restructuring agreement with its bondholders by June 30, 1999.
The bondholders have been notified of the position of the bank and vendors, as
discussed above, and are evaluating a financial restructuring plan proposed by
the Company. Management believes the Company will be unable to continue to
operate in the near term without an adequate restructuring agreement and
ultimately greater levels of working capital support from its bank and trade
credit from its vendors.
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.
APPAREL VENTURES, INC.
June 18, 1999 /s/ WILLIAM F. SINGLETARY
------------- ---------------------------------------
Date WILLIAM F. SINGLETARY
Chief Financial Officer
(Duly authorized officer and
principal financial and
accounting officer)
2
