Cherokee Global Brands latest forbearance extension expires on Friday amidst business strategy shift

23 October 2017

Cherokee, Inc. (CHKE) is a brand marketing platform that manages a portfolio of fashion and lifestyle brands across multiple consumer product categories, such as apparel, footwear, home products and accessories.

 

CHKE is currently in forbearance with its lender, Cerberus Business Finance, LLC through 27 October. The company was not in compliance with its leverage and fixed charge coverage ratio covenants as of its last two quarters, including its most recently reported quarter (2Q18) ending 29 July. Its senior credit facility closed less than a year ago, in December 2016, in order to partially fund the company’s USD 96m acquisition of Hi-Tec Sports International, a global footwear company, and repay existing debt under its previous loan.

 

The company is undergoing a significant shift in its strategy away from the Direct-to-Retail (DTR) licensing model, which gives retail partners the rights to sell products, to a wholesale licensing model for many of its brands, which entails arrangements for the manufacture and sale of products bearing its brands.

 

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