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Genesco, Finish Line approve settlement, terminate merger agreement
By Lisa Kerner
Charlotte, N.C., March 4 - Genesco Inc., the Finish Line, Inc., UBS LLC and UBS Loan Finance LLC entered into a definitive agreement to terminate their merger agreement and settle related litigation.
The boards of directors of both the Finish Line and Genesco approved the settlement agreement on Monday.
Under the settlement:
• The merger agreement between Genesco and the Finish Line will be terminated;
• The financing commitment from UBS to the Finish Line will be terminated;
• UBS and the Finish Line will pay Genesco $175 million in cash along with 6,518,971 class A shares of the Finish Line common stock, which is equal to 12% of the total post-issuance Finish Line outstanding shares; and
• Genesco and the Finish Line agreed to a mutual standstill agreement.
In a separate agreement, the Finish Line agreed to pay $39 million and USB agreed to pay $136 million of the $175 million owed to Genesco.
The cash payment and the issuance of shares to Genesco must be completed no later than 5 p.m. on Friday.
On Sept. 17, Genesco shareholders approved the June 18, 2007 merger agreement that would have given them $54.50 in cash, without interest, for each share of Genesco common stock they own. The transaction, valued at an estimated $1.5 billion, was slated to close in the fall.
A form 8-K filing with the Securities and Exchange Commission reported that UBS believed the Finish Line would not be able to provide, prior to April 30, a valid solvency certificate, which was a condition of the closing.
UBS had extended the termination date of the commitment letter to April 30 from Dec. 31.
Both Genesco and the Finish Line are specialty retailers. Genesco is based in Nashville, while the Finish Line is based in Indianapolis.
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