NEW YORK NexCen Brands Inc., parent of Maggie Moo's and other quick-service brands, said it has entered into an agreement with its lender that gives it short-term access to cash in order to continue operating as it works on restructuring the terms of its loan.
Last month, NexCen had revealed that it faced a liquidity crisis that raised “substantial doubt about the company’s ability to continue as a going concern.” The cash shortfall is related to its $93.7 million purchase of Great American Cookie Co. in January. NexCen had amended its credit facility with lender BTMU Capital Corp. to fund the purchase, and that amendment called for the company to repay $30 million of its debt by October.
NexCen admitted in May that it discovered “near-term operating cash shortfall” and would need to pay $21 million by October to satisfy its loan terms.
NexCen said it is trying to reach a long-term restructuring agreement with BTMU that would give it relief from its accelerated principal payment in October. The deal announced Friday lasts until July 17, but NexCen said BTMU may call on it to pay up sooner should it default on certain parts of its agreement.
NexCen also warned there was no guarantee a deal would be reached "that will provide the company with the additional liquidity it needs to operate its business."
In the meantime, NexCen said it has reduced operating costs by cutting its total workforce by 10 percent, with staff reductions at its New York and Georgia offices. The company indicated the cuts would free up approximately $3.5 million on an annualized basis.
In addition, NexCen said it was exploring strategic alternatives that could include a sale of one or more of its brands. It said on Friday that it has received "numerous expressions of interest" in both its Bill Blass and Waverly retail brands.
NexCen's stock has plummeted since its revealed its cash woes in May. In trading on Friday, the company's stock fell more than 10 percent to close at 43 cents a share. In the past 52 weeks, NexCen's stock had traded as high as $12.08.
NexCen is also facing at least three shareholder lawsuits for allegedly violating security laws in its purchase of Great American Cookie Co.
In addition to Maggie Moo's and Great American Cookie, NexCen's restaurant portfolio includes the Marble Slab Creamery, Pretzelmaker and Pretzel Time treat brands. The company's retail holdings include Bill Blass, The Athlete's Foot, Shoebox New York and Waverly.