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Small appliance maker Salton, Inc. (Lake Forest, IL, U.S.) announced that it has entered into an amended forbearance agreement with its senior lenders. The senior lenders have agreed, subject to the company's compliance with the terms and conditions of the amended agreement, to extend until Sept. 30, 2004 the period during which they will forbear from exercising their remedies relating to Salton's failure to comply with certain financial covenants in its senior debt.
The forbearance period is subject to several conditions, including a requirement that Salton: (a) deliver to the senior lenders by no later than June 25, 2004 a commitment letter for additional funding of at least U.S. $25 million on terms acceptable to the senior lenders, and (b) receive such additional funding by July 12, 2004.
Salton is currently negotiating with several parties the terms of such additional funding and other financing alternatives. Investment banking firm Houlihan Lokey Howard & Zukin Capital has been assisting the small appliance maker in connection with its examination of various capital raising opportunities. There is no assurance that Salton will receive a commitment letter for, or consummate any, financing.
The amended agreement permits the interest payment of approximately $6.7 million due on June 15, 2004 under Salton's outstanding 10-3/4 percent senior subordinated notes if the company meets certain conditions, including that Salton's availability under its senior credit agreement is at least $10 million after such payment. There is no assurance that these conditions will be satisfied.
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