Kellwood “business as usual” amid bankruptcy fears

US: Kellwood “business as usual” despite bankruptcy fears

By just-style.com | 14 July 2009

Kellwood Company, one of the largest apparel makers in the US, says it is "business as usual" despite being locked in talks to stave off a bankruptcy filing.

The company's problems come after it failed to renegotiate a $140m bond issue which matures on Wednesday (15 July).

Deutsche Bank, the largest holder of the bonds, pulled out of an exchange offer last Friday that would have seen Kellwood swap bonds for those with better terms which mature in 2014.

Kellwood, whose brands include Vince, Phat Farm and Sag Harbor, said it was "surprised and disappointed" by Deutsche Bank's decision.

"This comes at a time when Kellwood is performing well, is profitable and has a positive cash flow," said Michael W Kramer, president and CEO.

"Our operations and supply chain are strong. We are shipping our customers on time and will continue to ship our customers on time. Our challenge is simply a debt maturity issue."

Kellwood, which was sold to private equity firm Sun Capital Partners for $767m at the beginning of 2008, said talks are ongoing with Deutsche Bank and that it is "hopeful that we will reach an agreement."

However, Kramer noted: "At the same time, we are actively exploring a number of alternatives to strengthen our long-term financial position.

"No decisions have been made at this point and the process could take up to a month. The bottom line is that it is business as usual at Kellwood."

Since the buyout, Kellwood has been attempting to shift its business focus to a brand manager with high-end labels and its own retail operations.

Sectors: Apparel, Finance, Manufacturing, Retail

Companies: Kellwood, Phat Farm