The Finish Line works to close deal with Genesco as debt commitment remains in jeopardy

By Lisa Kerner

Charlotte, N.C., Sept. 19 - The Finish Line, Inc. forwarded to Genesco Inc. a request from UBS Loan Finance LLC and UBS Securities LLC for additional financial and other information. UBS provided the Finish Line with a commitment letter regarding financing for its proposed acquisition of Genesco.

Separately, UBS told the Finish Line it "intends to defer any further work on the remaining closing documents ... pending the results of its analyses of Genesco's financial condition and performance," a company news release stated.

On Sept. 11, UBS, concerned about the "apparent deteriorating financial position" of Genesco, asked for proof that the company had not experienced a material adverse effect.

The Finish Line continues to evaluate its options under the merger agreement and plans to continue working on the closing documents.

Genesco said it has complied with all requests for detailed financial and operational information from both UBS and the Finish Line. UBS' latest request does not fall under the "spirit nor the letter" of the agreement between Genesco and the Finish Line, according to Genesco chairman and chief executive Hal N. Pennington.

Pennington believes UBS is looking for a way out of its commitment based on the "upheaval in the credit markets" rather than based on Genesco's recent financial results. The CEO made his claim in a Sept. 19 letter to the Finish Line CEO Alan H. Cohen.

Genesco said it will continue to provide information to the Finish Line and UBS in accordance with the processes set forth in the merger agreement. However, the company is demanding that the Finish Line immediately:

• Consummate the merger with Genesco;

• Deliver a substantially completed draft offering memorandum relating to its proposed financing to UBS;

• Schedule presentations to the rating agencies to obtain expedited ratings of the Finish Line's securities; and

• Enforce all its rights under the commitment letter.

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 the Finish Line.

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