Broder Bros. agrees to exchange bonds for notes, stock, skips coupon

New York, April 15 - Broder Bros., Co. said it reached agreement with an ad hoc committee of holders of its 11¼% senior notes due Oct. 15, 2010 to exchange the $225 million of its existing notes for $100 million of new notes and 95% of the company's common stock.

Broder also said it will not make the interest payment on the notes due April 15. There is a 30-day grace period before a default occurs. Failure to pay the coupon will not cause a default on the credit facility following the recent amendment.

The committee is made up of holders owning roughly 30% of the existing notes. The figures quoted assume full participation of all noteholders, not just the committee. In addition, the new allocation of stock would also include provision for a management option program.

"We are pleased to have come to these terms with the note holders. This is the next step that was contemplated when we amended our revolving credit facility with the bank group," said Tom Myers, Broder Bros.' chief executive officer, in a news release.

"This exchange, once completed, will reduce the company's leverage, extend the maturity of its senior unsecured debt, decrease its cash interest expense, and enhance the company's near-term liquidity."

The ad hoc committee was advised by Broadpoint Capital on financial issues and by Quinn Emanuel Urquhart Oliver & Hedges, LLP on legal issues.

Broder Bros. is a Trevose, Pa., distributor of imprintable activewear to the screen printing, embroidery and promotional product industries.

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