Phoenix Footwear Reports New Bank Financing

CARLSBAD, Calif.--()--Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG) today announced that it has entered into a new Bank Financing Agreement with NewStar Business Credit, LLC.

“We have grown for three consecutive years, the last two of which have been at four times the industry average. We are especially pleased to be able to secure this additional capacity to fund our continued growth, while at the same time, reduce our capital costs.”

BANK REFINANCING

On February 2, 2015, the Company entered into a Loan and Security Agreement with NewStar Business Credit, LLC. The Loan Agreement provides for up to $9.0 million in borrowing capacity consisting up to $8.0 million (subject to a borrowing base as defined in the Loan Agreement) with a five-year maturity (the “Revolving Credit Facility”) and a term loan of $1,000,000 (the “Term Loan”). The principal amount of the Term Loan is payable in 36 equal monthly installments of $27,778, plus accrued interest, on the first day of each calendar month beginning March 1, 2015.

Interest accrues on the principal amount outstanding under the Revolving Credit Facility at the rate equal to the greater of (i) the rate per annum published on each Business Day in the “Money Rates” table of The Wall Street Journal as the one-month LIBOR rate, adjusted daily, and (ii) 1.0% (such greater amount, the “LIBOR Rate”) plus 3.75%. Interest accrues on the principal amount outstanding under the Term Loan at the rate equal to the LIBOR Rate plus 5.0%.

This new Revolving and Term facility offers the Company additional working capital at a substantially reduced cost. Commenting on the new loan agreements, James Riedman, President and CEO of Phoenix Footwear added, “We have grown for three consecutive years, the last two of which have been at four times the industry average. We are especially pleased to be able to secure this additional capacity to fund our continued growth, while at the same time, reduce our capital costs.”

The Loan Agreement includes various financial and other covenants with which the Company has to comply in order to maintain borrowing availability and avoid penalties, including maintaining minimum tangible net worth and minimum fixed charge coverage ratios.

At the closing under the Loan Agreement, the Company used proceeds from the Term Loan and the Revolving Credit Facility to pay in full the obligations outstanding under that Loan and Security Agreement dated July 30, 2012 between the Company and Alostar Bank of Commerce, which carried an annual interest rate of 6.5% plus a monthly fee of $2,000, and that Loan and Security Agreement dated July 30, 2012 between the Company and Gibraltar Business Capital which carried an annual interest rate of 18%. Those agreements were terminated.

As condition to the closing under the Loan Agreement, the Company also extended from October 30, 2015 until July 31, 2020 the maturity date of the $1,350,000 in aggregate principal amount of its subordinated secured 1% convertible notes held by Greenwood Capital Limited Partnership and MGPLA LP.

About Phoenix Footwear Group, Inc.

Phoenix Footwear Group, Inc., headquartered in Carlsbad, California, specializes in quality comfort women’s and men’s footwear with a design focus on fitting features. Phoenix Footwear designs, develops, markets and sells footwear in a wide range of sizes and widths under the brands Trotters® and SoftWalk®. These brands are primarily sold through department stores, leading specialty and independent retail stores, mail order catalogues and internet retailers and are carried by approximately 800 customers in over 1,307 retail locations throughout the U.S. Phoenix Footwear has been engaged in the manufacture or importation and sale of quality footwear since 1882.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding Phoenix Footwear’s ability to repay its bank debt in a timely manner, future growth and performance of its individual brands, expected financial performance and condition for fiscal 2014 and/or statements preceded by, followed by or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” “exploring,” or similar expressions. Although Phoenix Footwear believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Phoenix Footwear or any other person that the objectives and plans of Phoenix Footwear will be achieved. All forward-looking statements included in this press release speak only as of the date of this press release and are based on Phoenix Footwear's current expectations and projections about future events, based on information available at the time of the release, and Phoenix Footwear expressly disclaims any obligation to release publicly any update or revision to any forward-looking statement contained herein if there are changes in Phoenix Footwear’s expectations or if any events, conditions or circumstances on which any such forward-looking statement is based.

Contacts

Phoenix Footwear Group, Inc.
Greg W. Slack
Chief Financial Officer
(760) 602-9688

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