Outdoor financials: Eddie Bauer reports anticipated warrant issuance, plus Forzani
Trying to retain its listing on the Nasdaq, Eddie Bauer Holdings executed an amendment to the $225 million Amended and Restated Term Loan Agreement it has with various lenders, and proxy advisors voiced disagreements on Forzani board nominees.
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Eddie Bauer reports anticipated warrant issuance
Trying to retain its listing on the Nasdaq, Eddie Bauer Holdings (Nasdaq: EBHI) has executed an amendment to the $225 million Amended and Restated Term Loan Agreement it has with various lenders, Goldman Sachs Credit Partners, as syndication agent, and JP Morgan Chase Bank, as administrative agent.
Consideration for the amendment included the company’s agreement to issue to the term loan lenders $0.01 exercise price warrants exercisable for 19.9 percent of its common stock on a fully diluted basis — about 7.8 million shares.
The warrants are subject to adjustment for any conversion of Eddie Bauer’s 5.25 percent Convertible Senior Notes due 2014 in accordance with the terms of the Convertible Note Covenant of the First Amendment, new capital infusions of less than $40 million and exercise of equity compensation grants.
Upon each potential extension of the Convertible Notes Covenant, the company will be required to issue additional $0.01 exercise price warrants exercisable for 15 percent of its common stock on the same fully-diluted basis as the initial warrant issuance.
Nasdaq gave the company an exemption from stockholder approval of the issuance of the warrants because of the delays it would have caused and potential “significant detrimental impact on (the company’s) financial viability.”
Proxy advisors disagree on Forzani board nominees
Proxy advisors have been weighing in on the Forzani Group’s (TSX: FGL) proxy battle with New York hedge fund Crescendo Partners, which opposes two Forzani nominees for election to the board of directors.
Proxy advisor Glass Lewis & Co. said that shareholders should vote for all eight Forzani nominees, concluding that the dissident “failed to make a compelling case against the company’s current board and management.”
Shortly after, proxy advisor RiskMetrics Group advised shareholders to vote for six of the eight Forzani nominees and one dissident nominee.
RiskMetrics, despite its recommendation, said it “recognizes the considerable achievements made by the company, the steps taken and the initiatives currently underway.” The report had no criticism of Henri Drouin and Donald Gass, the two Forzani nominees that RiskMetrics did not support.
In response, John Forzani, chairman of the Forzani Group, said in a statement, “We respectfully disagree with RiskMetrics’ recommendation that shareholders should vote for even one of the dissident nominees. In our view, the dissident does not represent the interests of all shareholders, is less qualified than either Mr. Drouin or Mr. Gass, and if elected could have the unintended consequence of weakening the board’s ties to our franchisees in Quebec who deliver approximately one-third of Forzani’s retail sales.”
Forzani added, “The board changes proposed by the dissident would be disruptive and unnecessary, and may jeopardize the continued swift and effective execution of FGL’s strategic plan.”
Canada’s largest national retailer of sporting goods, Forzani operates sores under various banners, including Fitness Source, Sport Chek, Coast Mountain Sports and Sport Mart.
–Compiled by Wendy Geister
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