Lazare Kaplan: Bank Wants to Terminate Agreements

From Lazare Kaplan’s latest  8-K:

On February 19, 2008, Lazare Kaplan Belgium NV, a subsidiary of the Company (the “Subsidiary”), and Antwerp Diamond Bank NV (”ADB”) entered into a Credit Confirmation Letter (the “Credit Letter”), pursuant to which ADB granted to the Subsidiary an uncommitted US$25 million credit facility (the “$25M Facility”). The Subsidiary previously used the $25M Facility from time to time for working capital purposes; however, as of December 29, 2009, there were no amounts outstanding under the $25M Facility.

On December 29, 2009, ADB delivered a notice to the Subsidiary, stating that in accordance with the terms of the Credit Letter, it is terminating the $25M Facility as of January 28, 2010.  …

On February 20, 2008, the Company and ADB entered into a Credit Confirmation Agreement (the “Credit Agreement”), pursuant to which ADB granted to the Company an uncommitted US$45 million credit facility (the “$45M Facility”). The Company uses the $45M Facility for working capital purposes. As of December 30, 2009, approximately $43 million was reflected as outstanding under the $45M Facility by ADB.

On December 30, 2009, ADB delivered a notice to the Company, stating that in accordance with the terms of the Credit Agreement, it is terminating the $45M Facility on March 1, 2010. Pursuant to such notice, ADB is claiming that the outstanding principal balance due and owing under the $45M Facility, as set forth above, plus accrued and unpaid interest, costs, charges and fees (including attorneys’ fees) shall be due and payable on such termination date, which aggregate amount the Company has not as of yet ascertained.

The Company sharply disputes ADB’s claim that it has the right under the Credit Agreement to terminate the $45M Facility at this time. The Company believes that it has material defenses and counterclaims to any legal action that might be filed by ADB on the basis of the asserted termination. The Company expects to be in discussions with ADB to amicably resolve these matters, of which there can be no assurance of success.

See it all here. The company is also receiving $28 million from its underwriters.

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