Wilsons still needs to find more capital in second quarter to avoid bankruptcy

By Caroline Salls

Pittsburgh, June 17 - Wilsons The Leather Experts Inc. said it still needs to secure additional capital in the second quarter to stay out of bankruptcy, according to a 10-Q filed Tuesday with the Securities and Exchange Commission.

Wilsons said it will need to amend some of the restrictions included in its credit agreement, find alternative sources of credit and raise additional capital during the second quarter in order to execute its "go forward plans."

The company said it is exploring possible sources of funding, including possible sales of existing assets, and it is also considering additional store closures to optimize cash flow.

If Wilsons is forced to file for bankruptcy, it may be required to redeem shares of its preferred stock at their liquidation value, which is the $45 million purchase price for those shares plus any unpaid dividends, according to the 10-Q.

However, the company said the redemption would not be permitted by law unless it is able to pay its debts as they come due, and the redemption would be prohibited by the terms of its existing credit agreement.

As previously reported, Wilsons originally announced that it needed to find more capital in the second quarter when the company filed its 10-K annual report in April.

Wilsons said it stopped making payments under some of its licensing and lease agreements before the end of 2007 as part of its cost-reduction initiatives.

The company said its senior credit facility was amended on Feb. 14 to allow for the liquidation of 158 stores.

According to the 10-Q, Wilsons is still working to settle the lease obligations related to the store liquidations.

Wilsons is a Minneapolis specialty retailer of leather outerwear, accessories and apparel.

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