(Filed Under Financial and General Interest News). It looks like Tefron Ltd.’s financial safety net is remaining in place. The ailing Israel-based manufacturer of seamless intimate apparel, activewear and swimwear, announced on Wednesday that it has signed a Memorandum of Understanding (MOU) with its principal lenders Bank Leumi Ltd, Bank Discount le-Israel Ltd and Bank Hapoalim Ltd. to continue and expand its line of credit. Through this MOU, the banks will continue the existing $28.95 million line of credit, and add an additional $1.8 million for a total credit line of $30.75 million. The MOU also calls for an addition of at least $4 million in equity investment.
“With the signing of the MOU, we have removed the last element of doubt about Tefron’s financial picture,” Jacob Gelbard, chairman of Tefron Ltd, said in a statement. “This closes the chapter on what has clearly been a challenging financial month for our company […] this successful resolution of our financial challenges allows Tefron to focus on the most urgent: executing our turnaround plan and meeting customer needs with superior products.”
Gaining this continued financial backing may have saved the company from going out of business. The company recently said that if the banks cancel their credit lines, continued operations are in jeopardy.
As previously reported in BODY, Tefron was particularly hard-hit by the third quarter of last year with revenues declining 45.1 percent, to $21.0 million from $38.3 million. This is reportedly largely due to Victoria’s Secret, one of Tefron’s largest customers, moving some of its production from the company to India, resulting in a net loss of $23.5 million. According to multiple reports, Nike, another major Tefron customer, has been placing smaller orders with the company than in the past, causing many to speculate the activewear giant will also take production elsewhere.
In addition to Victoria’s Secret and Nike, Tefron’s customers include The Gap; Target; JCPenney; and Warnaco; among others. For further information, contact Eran Rotem, chief financial officer of the company: Reran@Tefron.com.
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