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Quaker Fabric likely to shut down

Says it is unable to meet loan terms

Heath Combs -- Furniture Today, July 3, 2007

FALL RIVER, Mass. — Fabric supplier Quaker Fabric said Monday it will likely shut down and liquidate its assets because it is unable to meet the terms of its lending agreements.

As a result, lenders will only advance funds to the company on a discretionary basis.

There is “significant uncertainty” as to whether the company will have enough liquidity to continue operations after its annual shutdown period, which runs from July 2 to July 15, Quaker said in a press release.

The company said it is in talks with existing lenders about financing needed to conduct an orderly liquidation and sale. Quaker does not anticipate generating sufficient funds to pay common stock holders through liquidation, which would render the stock worthless.

Quaker also said it is seeking alternative sources of liquidity, including debt, equity or a combination of debt and equity financing.

The company has reported a string of quarterly sales declines and losses. In the first quarter of this year, it posted a loss of $5.1 million on sales of $32.6 million, which were down 29.6% from the same period a year earlier.

In announcing the results in April, Quaker President and CEO Larry Liebenow had called 2007 “a key transition year” for the company and said the primary emphasis would be on “increasing overall sales, striking the right balance between domestic production and global sourcing, achieving costs consistent with our sales, and generating adequate cash flows.”

The company also has been working to sell assets no longer needed to support is declining domestic fabric business. Earlier this year it announced a pair of deals to sell two plants in Fall River for a total of $7.6 million, although the transactions were not expected to close until early September.

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Quaker Fabric to close?

Jul 8, 2007

Quaker 1Q net sales drop 29.6% to $32.6M

Apr 22, 2007

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