Kellwood bondholder Deutsche Bank rejects offer to exchange bonds

By Angela McDaniels

Tacoma, Wash., July 13 - Kellwood Co. is trying to renegotiate a $140 million bond issue that matures this month. The company said Deutsche Bank, a large holder of these bonds, has changed its position and will not accept new bonds due 2014 in exchange for the existing bonds.

Kellwood has been negotiating the possible exchange for two months, according to a company news release.

"We are surprised and disappointed by Deutsche Bank's current position as they were on our bondholder steering committee, helped structure the deal and told us all along that they supported it," Kellwood president and chief executive officer Michael W. Kramer said in the release.

"This comes at a time when Kellwood is performing well, is profitable and has a positive cash flow. Our operations and supply chain are strong. We are shipping [to] our customers on time and will continue to ship our customers on time. Our challenge is simply a debt maturity issue.

"We are continuing to negotiate with Deutsche Bank and all of our bondholders and are hopeful that we will reach an agreement," Kramer said. "At the same time, we are actively exploring a number of alternatives to strengthen our long-term financial position.

"No decisions have been made at this point and the process could take up to a month. The bottom line is that it is business as usual at Kellwood," he added.

St. Louis-based Kellwood makes and markets apparel and consumer soft goods. It is an affiliated portfolio company of private investment firm Sun Capital Partners, Inc.

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