Quaker moves to avoid default
By Furniture Today Staff -- Furniture Today, March 26, 2006
Fall River, Mass. — Major upholstery fabric supplier Quaker Fabric is working with its lenders on a waiver or forbearance agreement to avoid a default on $37.6 million in outstanding loans.
In a request for an extension until March 31 to file its annual 10-K report, Quaker told the Securities and Exchange Commission that its accounting firm is expected to express "a substantial doubt as to the company's ability to continue as a going concern" in its review of Quaker's 2005 financial results.
While Quaker has not missed a loan payment, the company said it has "failed to comply with the amended financial covenants in the 2005 Credit Agreement as of the fiscal month ended March 4, 2006." If the company defaults, all its debts could be due and payable in full.
Quaker expects to report a net loss of about $26.3 million for fiscal 2005, compared to a net loss of $2 million the previous before.
The company said total 2005 revenues dropped 22.3%, driven by a 25.4% decrease in domestic fabric sales, which it blames on the continued strength of imported leather and faux suede in upholstered furniture.
The company, with about $225 million in annual volume, recently sold a plant here to reduce expenses, and signed partnerships with fabric sources in China and Korea.
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