Cherokee Global Brands Amends Credit Facility with Cerberus

    SHERMAN OAKS, Cali., Nov. 13, 2017 (GLOBE NEWSWIRE) —

  • New financial terms provide greater financial flexibility
  • Amendment to eliminate obligation to call equity commitments                                                                                                     

Cherokee Global Brands (NASDAQ:CHKE), a global brand marketing platform that manages a growing portfolio of fashion and lifestyle brands, today announced the amendment, subject to the satisfaction of certain conditions, of its senior secured credit facility(the “Amendment”).

“We are pleased to announce the amendment of our credit facility with our lenders, whom we thank for their collaborative approach throughout the amendment process,” commented Henry Stupp, Chief Executive Officer of Cherokee Global Brands.  “The amendment revises the financial covenants materially to enable the company to focus on growing the business for the long term. Importantly, as part of the amendment, we have eliminated the liquidity call which could have potentially resulted in the issuance of approximately $5.5 million in additional common stock.  The amendment of our credit facility is a very positive development for the Company and important to stabilizing our balance sheet, sustaining liquidity and better positioning us for profitable future growth.”

Mr. Stupp continued, “Over the last several months, we’ve taken several actions to focus on our core business fundamentals and  high-growth brand opportunities During this time, we have made efforts to strengthen our team while addressing our financial solvency.  As a result, we are focused on  reducing operating expenses and improving cash flow.  We’re comfortable with our financial position and confident in our ability to meet our existing obligations.”

The Amendment, among other things, eliminates the requirement that the Company, under certain circumstances, exercise its rights to call the equity commitment rights under certain Common Stock Purchase Agreements dated August 11, 2017.  Upon the effectiveness of the Amendment, such commitments are expected to no longer be in effect, and none of the Company, the lenders under the senior secured credit facility or the investors under such agreements would have the right to require the investors to purchase the Company’s common stock under such agreements.  As a result, the special meeting of stockholders that had been called for November 28, 2017 to approve such issuances is expected to be cancelled.  The Amendment also provides, as a condition to the effectiveness of the Amendment, that investors purchase participations from the lenders under the senior secured credit facility in an aggregate amount of no less than $11.5 million on or before December 8, 2017.  The Company is in advanced discussions with investors who have indicated an interest in purchasing such participation interests and anticipates that it will announce a completion of that investment on or before December 8, 2017. 

Additional information and a full copy of the amendment are included in the Company’s Form 8-K filed today with the Securities and Exchange Commission.

About Cherokee Inc.
Cherokee is a global brand marketing platform that manages a growing portfolio of fashion and lifestyle brands including Cherokee®, Carole Little®, Tony Hawk® Signature Apparel and Hawk Brands®, Liz Lange®, Everyday California®, Sideout®, Hi-Tec®, Magnum®, 50 Peaks®, Interceptor® and Flip Flop Shops®, a franchise retail chain, across multiple consumer product categories and retail tiers around the world. The Company currently maintains license and franchise agreements with leading retailers and manufacturers that span over 110 countries in 12,000 retail locations and digital commerce.

Safe Harbor Statement 
This news release may contain forward-looking statements regarding future events and the future performance of Cherokee. Forward-looking statements in this press release include, without limitation, express or implied statements regarding: the Company’s ability to complete the sale of participation interests in the Cerberus Credit Facility; the Company’s expectations regarding its ability to satisfy the revised financial covenants; the Company’s ability to sustain necessary liquidity and grow its business; the anticipated impact of the additions to its accounting staff; and anticipated market developments and opportunities.  A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and is based on currently available market, operating, financial and competitive information and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expected or projected, including, among others, risks that: the Company will not be able to complete the sale of the participation interests on terms acceptable to the Company or Cerberus, on a timely basis, or at all; the Company and its partners will not achieve the results anticipated in the statements made in this release; global economic conditions and the financial condition of the apparel and retail industry and/or adverse changes in licensee or consumer acceptance of products bearing the Company’s brands may lead to reduced royalties; the ability and/or commitment of the Company’s licensees to design, manufacture and market Cherokee®, Hi-Tec®, Magnum®, 50 Peaks®, Interceptor®, Carole Little®, Tony Hawk® and Hawk Brands®, Liz Lange®, Everyday California® and Sideout® branded products could cause our results to differ from our anticipations; the Company’s dependence on a select group of licensees for most of the Company’s revenues makes us susceptible to changes in those organizations; and the Company’s dependence on its key management personnel could leave us exposed to disruption on any termination of service.   The risks included here are not exhaustive. Other risks and uncertainties are described in our annual report on Form 10-K filed on May 18, 2017, its periodic reports on Forms 10-Q and 8-K, and subsequent filings with the SEC we make from time to time, including the preliminary prospectus supplement that we filed in connection with the offering described herein. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contact:
Cherokee Global Brands
Jason Boling, CFO
818-908-9868

Addo Investor Relations
Laura Bainbridge/Patricia Nir
310-829-5400