Apparel retailer Harold's Stores has obtained US$5m in additional financing in the form of a new subordinated loan from RonHow, in order to provide for additional working capital the company said.

On 22 August 2006 the company reported a second quarter net loss of $5m, compared to a net loss of $2.9m in the same period of 2005.

In conjunction with this transaction, Harold's entered into an amendment to its existing credit facility with Wells Fargo Retail Finance to permit the new financing, but otherwise did not materially change the terms of the facility.

Investment vehicle RonHow, owned and controlled by Ronald de Waal and Howard Lester, said that the amount of its loan could be increased to $10m.
"This funding is a significant show of continuing support by our major shareholders," said Leonard Snyder, Harold's Stores interim CEO. "This funding will enhance our daily working capital and allow us to continue to implement key strategic initiatives to improve our merchandise content and real estate portfolio."
The new loan will mature in May 2010 and bears interest payable monthly at a rate of 13.5% per year and is secured by all of the personal property owned by the company and its subsidiaries.