Salton hires Ernst & Young to help with amendment talks, restructuring

By Sara Rosenberg

New York, May 13 - Salton Inc. announced on Thursday that it has retained Ernst & Young Corporate Finance LLC as its financial adviser to help in the amendment negotiations with senior lenders, cost reduction initiatives and reduction of annual domestic operating expenses by a minimum of $40 million through a decrease in domestic operating costs and consolidation of U.S. operations.

As was previously reported, Salton was not able to comply with the consolidated fixed-charge ratio contained in its revolver during the quarter ended March 27 and anticipates non-compliance with certain financial covenants in April and May.

Senior lenders have entered into a forbearance agreement regarding the financial covenant problems until June 10.

"As we said in our earnings announcement and conference call, we are determined to return our U.S. operations to profitability," said Leonhard Dreimann, chief executive officer, in a company news release. "We have already begun to identify cost-cutting areas and are confident that these initiatives will result in a U.S. expense base that will allow us to be profitable in the U.S. with our current level of revenue. In the interim, we continue to have adequate liquidity to run our operations."

Salton is a Lake Forest, Ill., designer, marketer and distributor of branded, high-quality small appliances, home decor and personal care products.

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