Kellwood fails to renegotiate maturity of bonds, receives forbearance agreement from bank lenders

By Angela McDaniels

Tacoma, Wash., July 16 - Kellwood Co. said it was unable to successfully renegotiate and extend its $140 million bond issue that matured on July 15.

As previously reported, the company has been trying to negotiate an exchange of the existing bonds for new bonds due 2014. Deutsche Bank, a large holder of the bonds, said it will not participate in the exchange.

The board of directors voted to extend the time period for acceptance of the exchange offer until Friday, according to a company news release.

Additionally, Kellwood said it negotiated a forbearance agreement through and beyond Friday with its bank group, led by Bank of America, while the company explores a range of alternatives to strengthen its balance sheet.

"The board is extending the expiration date of the exchange offer to allow Deutsche Bank two more days to reverse its current position and accept the deal they helped structure and told us all along that they supported," Michael W. Kramer, Kellwood president and chief executive officer, said in the release.

"The challenge we face is the result of the debt maturity and not Kellwood's business performance. Our operations and supply chain are strong and we are currently a profitable company."

St. Louis-based Kellwood makes and markets apparel and consumer soft goods. It is an affiliated portfolio company of private investment firm Sun Capital Partners, Inc.

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