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Credit Crunch Got Corgi Plus Sell-through, Retailer Troubles Date: 5/16/2008 |
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The recently completed asset sales by Corgi International were precipitated by a shortage of cash caused by tightened credit requirements from its asset-based lender, poor sell-throughs over the holidays, and retailers with money problems, according to a statement from the company. Over the past few weeks, the company sold its Cards, Inc. (see ?Corgi Sells Cards, Inc.?) and die-cast (see ?Hornby Acquires Corgi Die-cast Business?) businesses. The Cards, Inc. sale to Esdeviuim netted $2.25 million and $700,000 worth of inventory. The die-cast business, which was running at only a $13 million annual rate due to the credit constraints, brought in $15 million plus $1.6 million for the inventory. The company used the proceeds to pay down debt to its bank, an asset lender, and trade creditors. It also opened a new asset-based credit line with less stringent terms. Corgi also announced that it would be shedding 65 employees, about 50% of its staff, including some that were expected to go to Hornby. The company?s board agreed to convert $600,000 of outstanding board fees to ADS?s (shares), and reduced board fees for the coming year by 50%. The company also told investors that it would not hit the numbers in its prior guidance for this fiscal year. COO/CFO Jack Lawrence also noted that the company would still need to seek additional financing, although its liquidity was significantly improved. |
| Source: ICv2 |
