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Finish Line says merger financing for Genesco could be in jeopardy
By Lisa Kerner
Charlotte, N.C., Sept. 14 – UBS Loan Finance LLC and UBS Securities LLC, in a Sept. 11 letter to the Finish Line, Inc., expressed concern about the “apparent deteriorating financial position” of Genesco Inc.
UBS had provided the Finish Line with a commitment letter regarding financing of its proposed acquisition of Genesco, according to a company news release.
In the letter, UBS said its agreement to provide financing may be terminated if a “material adverse effect” has occurred with respect to Genesco.
Genesco said it has not experienced a material adverse effect.
However UBS wants the Finish Line to have Genesco provide all financial and other information as proof.
Finish Line had said it was disappointed with Genesco’s second-quarter fiscal 2008 financial results in a prior news release. Genesco reported a loss before discontinued operations of $2.9 million, or $0.13 per diluted share, for the second quarter ended Aug. 4. For the same period last year, the company reported earnings before discontinued operations of $5.9 million, or $0.24 per diluted share. Genesco's net sales for the second quarter of fiscal 2008 rose 8% to $328 million, compared with $304 million for the second quarter of fiscal 2007.
Genesco’s shareholders will be asked to vote on the proposed merger of the company with a subsidiary of the Finish Line at a special meeting on Monday. The meeting will be web cast live at noon ET and can be accessed at www.genesco.com, according to a company statement released on Friday.
The June 18 merger agreement between the two specialty retailers gives Genesco shareholders $54.50 cash per share in a transaction valued at some $1.5 billion.
Genesco's Nashville operations will be maintained, and the company will become a subsidiary of Indianapolis-based Finish Line.
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