Rafaella buys back $6 million senior secured notes

By Devika Patel

Knoxville, Tenn., May 15 - Rafaella Apparel Group, Inc. purchased $6 million of its outstanding senior secured notes at a discount on the open market in January, according to a 10-Q filed Thursday with the Securities and Exchange Commission.

A pre-tax gain of approximately $700,000, consisting of unamortized original issue discount and deferred financing costs and the discount paid to purchase the senior secured notes, was recorded to interest expense during the quarter ended March 31.

The company said it estimates that an annual excess cash flow payment for the fiscal year ending June 30 will not be required.

Within 100 days after the end of each fiscal year, beginning with the fiscal year ended June 30, 2006, the company is required to make an offer to repurchase senior secured notes at 101% of the principal amount at maturity, plus interest to the date of purchase, with 50% of Rafaella's excess cash flow.

During November 2007 and November 2006, the company repurchased $221,000 and $17.43 million in notes, respectively.

The November 2007 and 2006 repurchases approximated $234,000 and $18.4 million, respectively.

The company wrote off $1.7 million of unamortized original issue discount and deferred financing costs to interest expense in connection with the November 2006 repurchase. Unamortized original issue discount and deferred financing costs associated with the November 2007 repurchase were not significant, according to the filing.

Engomi, Cyprus-based Rafaella manufactures intimate apparel.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.