Finlay Warns on Liquidity
By JCK Online Staff -- JCK Online, 2/1/2009 2:00:00 AM
Finlay Enterprises issued a warning that the U.S. recession had hurt its liquidity position, and it may not meet its financial obligations.
Finlay, which operates its own stores as well as counters in department store chains, added that its lenders decreased the borrowing availability under its revolving credit agreement and are performing another review that may further affect Finlay Jewelry's borrowing capacity. The company said its debt includes $200 million in senior notes and $353 million under the revolving credit facility on Nov. 1.
“[C]urrent conditions have negatively impacted our liquidity position and operating performance, and our sales are significantly below our original projections,” Finlay said. “There can be no assurances that our business operations, working capital, and borrowing availability through the end of the fiscal year will be sufficient to meet current estimates of working capital requirements as well as allow Finlay Jewelry to maintain compliance with the $30 million minimum unused balance as required by the revolving credit agreement.”
Finlay, which also operates the Bailey Banks & Biddle and Carlyle jewelry chains, said its loss was $20.8 million in the third quarter ended Nov. 1 compared with $7.5 million in the third quarter of the prior year.
Macy's has told the company it is not renewing license agreements expiring on Jan. 31 at 93 of the 343 jewelry departments it operates for the department store chain. Finlay derives 52 per-cent of its sales from counters it operates at Macy's.
Finlay also will end its relationship with 47 Lord & Taylor stores that accounted for sales of about $44 million in its last fiscal year.
The jeweler moved its stock listing to the OTC Bulletin Board from Nasdaq earlier this year after it failed to maintain a required minimum market value.
