Quaker receives default notices
By Furniture Today Staff -- Furniture Today, July 16, 2007
Fall River, Mass. — Quaker Fabric said in a regulatory filing last week that it had received default notices from its lenders, but that they did not demand immediate repayment of loans.
Quaker also said that on July 3 the company terminated the employment of three of its officers: Tom Muzekari, vice president-sales; James Dulude, vice president-manufacturing; and Michael Costa, principal accounting officer.
The fabric supplier issued a press release July 2 saying that it "likely will commence an orderly liquidation of its business and a sale of its assets." It said the reason was that its lenders were no longer willing to commit funds to the company, and would only advance money at the lenders' discretion.
In last week's filing with the Securities and Exchange Commission, Quaker elaborated on what had happened since the July 2 announcement. It said that a lender, Bank of America, and an agent for term loan lenders, GB Merchant Partners, issued Quaker default notices on July 3.
Those notices pushed up interest rates on Quaker's loans by 2 percentage points, the filing said. The lenders also told the company they "have no further commitment or obligation to make additional loans" to Quaker.
Quaker said that as of July 3, it had $34.2 million in loans outstanding under a 2006 agreement.
Meanwhile, Greensboro, N.C.-based yarn supplier Unifi filed a notice with the SEC last week that it was owed about $3.2 million by Quaker as of June 24, the end of its fiscal fourth quarter. It said it will take a pretax charge for bad debt in that amount for the fourth quarter.
Unifi also said it expects to write down some $300,000 of inventory that was manufactured for Quaker and might not be sold to other customers.
