MONTREAL, QUEBEC--(Marketwired - Feb. 15, 2017) - Le Château Inc. (TSX:CTU.A) has entered into an agreement with a corporation controlled by Herschel Segal, the founder of Le Château and a Director and a significant shareholder of the Company, for a financing of $2.0 million.
The financing will provide the Company with additional capital and financing flexibility, with proceeds being used primarily for working capital purposes. The financing is in the form of a secured loan which bears a variable rate of interest equal to the lesser of (i) the prime rate of the Royal Bank of Canada multiplied by two and (ii) 7.5%. The loan is repayable at maturity on July 14, 2017. The loan will be secured by all the Company's property and will be subordinated in terms of ranking and repayment to the Company's $80.0 million revolving credit facility.
The transaction was approved by all of the disinterested directors of the Company and is exempt from the requirement to obtain minority shareholder approval under the related party transaction rules of applicable securities legislation.
Le Château is a leading Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories and footwear for style-conscious women and men. The Le Château brand is sold exclusively through the Company's 187 retail stores located in Canada. The Company's retail locations are primarily found in major urban shopping malls, as well as street-front locations with high pedestrian traffic. In addition, Le Château's web-based marketing is further broadening the Company's customer base among internet shoppers in both Canada and the United States. With its 57-year tradition of vertical integration, emphasizing a design and manufacturing approach to retailing, Le Château is unique among Canadian fashion merchants.
This news release may contain forward-looking statements relating to the Company and/or the environment in which it operates that are based on the Company's expectations, estimates and forecasts. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond the Company's control. A number of factors may cause actual outcomes and results to differ materially from those expressed. These factors also include those set forth in other public filings of the Company. Therefore, readers should not place undue reliance on these forward-looking statements. In addition, these forward-looking statements speak only as of the date made and the Company disavows any intention or obligation to update or revise any such statements as a result of any event, circumstance or otherwise except to the extent required under applicable securities law.
Factors which could cause actual results or events to differ materially from current expectations include, among other things: credit facility renewal and other liquidity risks; the ability of the Company to successfully implement its business initiatives and whether such business initiatives will yield the expected benefits; competitive conditions in the businesses in which the Company participates; changes in consumer spending; general economic conditions and normal business uncertainty; seasonality and weather patterns; changes in the Company's relationship with its suppliers; lease renewals; information technology security and loss of customer data; fluctuations in foreign currency exchange rates; interest rate fluctuations and changes in laws, rules and regulations applicable to the Company. There can be no assurance that borrowing will be available to the Company, or available on acceptable terms, in an amount sufficient to fund the Company's needs or that additional financing will be provided by any of the controlling shareholders. The foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results.