The agreement removes defaults under previous covenants and will extend the credit line once the company has paid off a series of notes that are due in August. The company expects the revolving credit line will provide enough working capital for at least the rest of this year.
The agreement with the banks also caps the amounts that can be paid to property owners of the 111 stores Wilsons plans to close.
Shares of Wilsons dropped by more than one-third Friday after the company said it would be late filing its annual report with the Securities and Exchange Commission. The retailer says the delay is due to ongoing negotiations about a "significant" financing transaction that were not completed in time for the filing of its annual 10-K report.
The company would also issue warrants to the institutional investors, without further payment by them to Wilsons Leather, to purchase up to 5 million shares of Wilsons Leather common stock at a premium to the market price of the common stock at closing.
Wilsons operates 460 stores including 334 mall stores, 107 outlet stores and 19 airport stores. It typically runs another 200 or so seasonal stores from October through January for the traditional holiday selling period, but said it would likely cut that number in half this fall.
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