Wilsons Leather to repay 11¼% notes with equity proceeds

New York, April 26 - Wilsons The Leather Experts Inc. said that it has entered into a definitive agreement for an infusion of capital into the company and would use the proceeds to repay its $30.59 million of 11¼% senior notes that are scheduled to come due on Aug. 15.

The company originally issued $75 million of the 11¼% notes in August 1997 and previously repurchased about $44.4 million of the notes in transactions that took place in 1998, 1999 and 2000.

Wilsons Leather, a Brooklyn Park, Minn.-based operator of a chain of leather apparel stores, said it entered into a definitive common stock and warrant purchase agreement for the sale in a private placement of 17,948,718 shares of newly issued common stock to two investors for $1.95 per share. As additional consideration for the investors' commitment, Wilsons Leather has issued 2 million warrants exercisable for five years, and at closing will issue an additional 2 million warrants to the investors exercisable for five years, each at an exercise price of $3 per share.

The company said the transaction will provide Wilsons with a total of $35 million of new equity before expenses, for use in repayment of the 11¼% notes and for general working capital purposes.

Wilsons Leather expects that, subject to approval of its bank syndicate, that the repayment of the 11¼% notes will allow the company to resume borrowing under its revolving credit facility (until the 11¼% notes are retired, the amended credit agreement restricts Wilsons Leather's letters of credit to $15 million and prohibits borrowing under the revolving credit facility).

Wilsons Leather did not outline a timeframe for the completion of the equity infusion nor did it indicate whether the notes would be repaid ahead of their Aug. 15 maturity date.

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