Wilsons needs cash
Wilsons The Leather Experts has reported that it must raise additional capital in the
second quarter of 2008 otherwise it could face bankruptcy.
The retailer, which has seen sales drop consistently in recent months, said it needed to find new investors. It had $7.4 million in cash at the end of 2007, down from $45.6 million at the start of 2006, according to its annual report.
An independent auditor, KPMG, noted in the report that Wilsons' ongoing losses raised "substantial doubt" about its ability to continue as a going concern.
The retailer noted elsewhere in the document that under the terms of an amendment to its credit facility, it cannot borrow more money until it "provides projections and a business plan that are acceptable to its lender".
The company is hoping to raise capital, possibly by selling assets, but said it is uncertain if it will be able to secure capital. It said it may have to file for bankruptcy protection if can't raise capital by the second quarter. However, bankruptcy options may also be limited, due to the terms of its existing credit agreements, the company added.
The company announced in February that it would close 160 stores and cut 1,000 jobs to reduce costs.
In March it reported a loss of $8.4 million for the fourth quarter of 2007, down from a profit of $11.9 million during the same period a year earlier. Its chief executive, Michael Searles, said he would step down on announcing those results.
