The company's strategy in selling $7 million worth of non-core assets is keeping it alive. The sale comprised four real estate properties, a credit card clearing house and an Internet business for florists. The company's fiscal problems are attributed to a speedy expansion program that saw Gerald Stevens acquire 300 national flower shops in 18 months.
Bank of America is giving the locally-based retailer a new $7-million line of credit through February and, along with other lenders, is extending total debt payments of $16 million to June 2002 from February and May 2001. Top company managers also are loaning the company $1 million in working capital. Gerald Stevens' management team includes Steve Berrard and Gerald Geddis, former executives at Blockbuster Entertainment.
To get the new credit line, Gerald Stevens agreed to a higher loan interest rate; pay a $1.8 million fee; sign new and amended loan contracts; and put up additional collateral. The company's original $40-million line of credit was signed in June 1999.
In a move to boost its stock price on the Nasdaq exchange, Gerald Stevens is doing a five-for-one reverse stock split to attract a broader range of investors. The split has a record date of Nov. 14 and an effective date of Nov. 28. After the split, the company will have about 9.8 million shares, down from about 49 million shares earlier this week.
The company's stock is trading around 94 cents per share. The stock dropped to 37 cents per share in mid-October. It traded in the $13 range a year ago.
Company president John Hall is confident Gerald Stevens will be turned around during the industry's peak period running from Thanksgiving this month through Mother's Day in May.
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