The Finish Line says it wants to close Genesco deal despite lawsuit

By Lisa Kerner

Charlotte, N.C., Sept. 24 - The Finish Line, Inc. said it has complied with its obligations under the merger agreement with Genesco Inc. and continues to work on closing the deal. The company made the comments in a statement released on Monday.

The statement was in response to Genesco's lawsuit filed Sept. 21 in Chancery Court in Nashville asking the court to require the Finish Line to consummate its merger with Genesco without further delays by the company or UBS Loan Finance LLC and UBS Securities LLC. "No more reservation of rights; no more bankers' putting their pencils down," Genesco chairman and chief executive officer Hal N. Pennington said in a company news release.

The Finish Line said that, to date, Genesco has not responded to its requests for financial and other information and for access to Genesco's chief financial officer and financial staff. According to the Finish Line, it is Genesco's failure to provide information that constitutes a breach of the merger agreement.

The Finish Line is reviewing the Genesco lawsuit and plans to take steps to protect the interests of the company and its shareholders.

It was previously reported that the Finish Line was evaluating its options under the agreement after Genesco's disappointing second-quarter financial results, including a loss before discontinued operations of $2.9 million, or $0.13 per diluted share, for the second quarter ended Aug. 4. Genesco, for the same period last year, reported earnings before discontinued operations of $5.9 million, or $0.24 per diluted share.

On Sept. 17, Genesco shareholders approved the June 18 merger agreement that gives them $54.50 in cash, without interest, for each share of Genesco common stock they own. The transaction, valued at an estimated $1.5 billion, is slated to close in the fall. Genesco's Nashville operations will be maintained and the company will become a subsidiary of Indianapolis-based the Finish Line.

In a Sept. 11 letter to the Finish Line, UBS expressed concern about the "apparent deteriorating financial position" of Genesco, according to a prior news release. UBS provided the Finish Line with a commitment letter for financing its proposed acquisition of Genesco.

While Genesco said it has not experienced a material adverse effect, UBS asked for proof.

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