Private label and brand apparel company Tarrant Apparel Group has made a Securities Purchase Agreement to consummate a $10 million financing through the issuance of 6 per cent secured convertible debentures and warrants to buy up to 1,250,000 shares of the company's common stock to institutional investors.

The agreement is expected to close during December 2004, subject to customary closing conditions, including consent from the company's senior secured lenders.

T R Winston & Company acted as placement agent in the financing.

The debentures will pay interest at a rate of 6 per cent per annum and have a term of three years. The investors may convert the debentures into shares of the company's common stock at a price of $2.00 per share.

At any time after 12 months from the closing date, the company may force conversion of 100 per cent of the remaining principal amount of the debentures into common stock upon the satisfaction of certain conditions, including achieving a minimum market price and trading volume for the company's common stock.

The warrants will have a term of five years and an exercise price of $2.50 per share.

The company plans to use the net proceeds from the issue to finance the development of private brands and to manage increased sales volume anticipated for the coming year.

Tarrant Apparel Group serves specialty retailers, mass merchants, national department stores, and branded wholesalers by designing, merchandising, contracting for the manufacture of, and selling casual apparel for women, men, and children.