Toxic Filings

[sludgehound]

Careful w/ TBAC another iffy lender scene

Had a no news pop 5/6 +32% high 1.20 on no news. Today dropped to .68 -.12 Some real games played here not unlike SKNY and others that do 'restructuring' at expense of baggers.
Tandy Brands pushes retail crud like Sharper Image and had to discount. write-down Xmas holiday stuff. Says lender ok with that but working on a new lender deal. Weaker retailers looking like getting their clocks cleaned.

http://ih.advfn.com/p.php?pid=nmona&article=57213117
Financial Position

Working capital declined to $14.7 million at December 31, 2012 from $20.7 million at June 30, 2012 primarily due to the $6.7 million inventory write-down. Receivables declined to $7.1 million from $16.4 million at December 31, 2011 primarily due to an accelerated payment arrangement with the Company's second largest customer which provided approximately $11.7 million of cash in the current year second quarter. Inventories net of reserves were $29.7 million at December 31, 2012. Inventories, excluding the $6.7 million write-down, were $36.4 million compared to $32.7 million in the prior year period due to carrying inventories for new accessories programs with spring deliveries and higher levels of unsold gift products.

Current liabilities were $3.2 million lower than in the prior year. This decline was driven by a $4.6 million pay-down on the credit facility ($10.7 million at December 31, 2012) due to the accelerated customer payment arrangement, offset by $1.8 million in higher accounts payable for inventories with spring deliveries.

At December 31, 2012, the Company had $848,000 net borrowing availability, or $3.5 million excluding the minimum excess availability requirement of $2.7 million. As of April 15, 2013, the Company had $339,000 in net borrowing availability, or $2.4 million excluding the amended minimum excess availability requirement of $2.1 million, and $11.3 million in outstanding borrowings under its senior credit facility.

Receives Waiver from Senior Lender

On April 11, 2013, the Company obtained a waiver from its senior lender which waived the previously announced violation of the fixed charge coverage covenant under its credit facility and amended certain terms of the credit facility.

"Our current lender has continued supporting our operations while we have been in violation of the monthly trailing twelve month fixed charge coverage profitability covenant," said McGeachy. "We have continued to ship goods to our retailers without any service interruption and our suppliers have continued to be supportive while we execute our liquidity enhancement plans."

Signs Non-binding Term Sheet

The Company announced it signed a non-binding term sheet with a lender who could replace the Company's current lender on or before May 31, 2013. If executed, terms under the proposed credit facility would improve liquidity against the Company's current assets through:
• Higher advance rates on inventories
• Higher advance rates on accounts receivables
• Reduction of minimum excess availability
• Advances against held for sale idle real estate in Yoakum, Texas
• Advances against Gift segment holiday order book

"We are several weeks into the diligence process with a credible lender and, although there can be no guarantees with respect to definitive documentation, anticipate announcing a new credit facility by the end of May at the latest," said McGeachy.

The non-binding term sheet contains customary pre-close requirements with respect to diligence investigations and any new credit facility is expected to contain customary post-close covenants. Borrowings under the proposed credit facility are expected to bear interest in the LIBOR plus 8.5% to LIBOR plus 11.3% range (or 9.3% to 12.0%) over a 24 month period.

"We expected the new facility would be more expensive than our previous facility. However, it is important to us to balance the capital cost with potential dilution to our shareholders," said McGeachy. "The current term sheet contains no dilutive features and we believe this new facility will provide us the liquidity we need to execute our recently announced restructuring initiatives."

Outlook

"Through the execution of our recently announced restructuring plans, we are reducing our cost structure by $6 million to $7 million, reducing the risk associated with our gifts business and focusing on our most profitable core brands and customers," commented McGeachy. "We believe the execution of these initiatives will allow us to strengthen our competitive position and significantly improve profitability in fiscal 2014."