US: The Talbots suspends dividend, freezes pension fund
Struggling women's wear retailer The Talbots has suspended its quarterly dividend indefinitely and frozen the company's pension fund in a renewed bid to cut costs.
The announcements, designed to save US$35m in 2009, came as the retail group confirmed that it had secured a $200m unsecured term loan from Aeon Co, its majority shareholder through a subsidiary.
The cash has been used to pay off acquisition debt. In addition, the company has entered into a revolving credit agreement with Tokyo-Mitsubishi to secure a $15m credit line as committed working capital.
The Talbots said the suspension of the dividend was expected to save $29m in fiscal 2009, while the freeze of the company's pension plans should save another $6m.
"During these extraordinarily challenging times, it's essential that we take these difficult yet necessary measures to conservatively manage our business," said Trudy F Sullivan, president and CEO.
"The actions announced today, coupled with the steps we have already taken to improve our operating efficiency, will help position Talbots to weather the current economic challenges and emerge stronger when the economy recovers."
In February, The Talbots announced 370 job losses, reduced working hours and employee benefit cuts, as well as reducing capital spending for fiscal 2009 by nearly 50%.
The company has tried to reposition itself, focusing on a 35-plus consumer base, but sales have continued to fall, plummeting 23.4% in the quarter ended 31 January.
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