UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): July 17, 2008
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NEXCEN
BRANDS, INC.
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(Exact
Name of Registrant as Specified in Its Charter)
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Delaware
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(State
or Other Jurisdiction of
Incorporation)
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000-27707
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20-2783217
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1330
Avenue of the Americas, 34th
Floor, New York, NY
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10019-5400
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(212)
277-1100
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(Registrant’s
Telephone Number, Including Area Code)
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(Former
Name or Former Address, if Changed Since Last Report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry
Into a Material Definitive Agreement
On
June
20, 2008, NexCen Brands, Inc. (the “Company”) disclosed that the Company, NexCen
Holding Corporation (the “Issuer,” which is a wholly-owned subsidiary of the
Company), and other subsidiaries of the Issuer had entered into a letter
agreement with BTMU Capital Corporation (“BTMUCC”), the Company’s lender, which
provided the Company, until July 17, 2008, with
limited forbearance and near-term access to additional cash (the “Original
Agreement”). Details
regarding the Original Agreement are disclosed in a Current Report on Form
8-K
filed on June 20, 2008.
On
July
17, 2008, the Company and BTMUCC entered into an amended
and restated letter agreement that extended the original forbearance period
through August 8, 2008 (the “Restated Letter Agreement”).
The
terms and conditions of the Restated Letter Agreement include a number of
modifications that should enhance the Company’s access to cash to fund
operations.
Since
June 20, 2008, the Company and
BTMUCC have remained in active discussions. The
Company has made substantial progress in working with BTMUCC toward a
comprehensive restructuring of its borrowing facility, and it intends to
continue to work with its lender to formalize the restructuring by the end
of
the forbearance period on August 8, 2008. No agreement has yet been reached,
and
there can be no assurance that any agreement will be reached and approved
by the
parties by such date, or at all, on terms that will provide the Company with
the
additional liquidity it needs to operate its business.
The
Restated Letter Agreement includes a number of modifications that where provided
for in the Original Agreement, as well as additional modifications that will
enhance the Company’s access to cash to fund operations of the Issuer and its
subsidiaries. Certain additional modifications provided for in the Restated
Letter Agreement include:
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On
July 17, 2008, the Company, the Issuer and its subsidiaries will
be
permitted to withdraw certain additional amounts that remain in the
lockbox for the following purposes (in priority
order):
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Certain
of the Company’s subsidiaries will be paid approximately $1.1 million for
management fees accrued since May 31, 2008 to reimburse such subsidiaries
for operating expenses associated with managing the Company’s brands and
franchisees;
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BTMUCC
will be paid approximately $2.6 million for accrued interest on all
outstanding notes;
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BTMUCC’s
professional advisors will be paid approximately $418,000 for services
rendered in connection with the
restructuring;
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The
Issuer will receive approximately $4.6 million for use by the Company
and
certain of its subsidiaries for accrued accounts payable, accrued
expenses
and working capital; and
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Neither
the Issuer nor any of its subsidiaries will be required to make any
payments of principal with respect to any outstanding notes with
respect
to scheduled payments in July 2008.
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Approximately
$152,000 currently in a certain Issuer subsidiary’s bank account will be
released to the Issuer for use by the Company and certain of its
subsidiaries for accrued accounts payable, accrued expenses and working
capital.
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Approximately
$552,000 currently in a lockbox account will be retained in such
account
and set aside for the payment of fees to BTMUCC’s professional
advisors.
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Certain
of the Company’s subsidiaries agreed to collect an alternate management
fee (as defined in the Restated Letter Agreement) for managing the
Company’s brands and franchisees effective on and after May 31,
2008.
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In
the
Restated Letter Agreement, BTMUCC continues to allege that certain Defaults
and
Events of Default (as defined in the existing funding and security agreements,
as amended) have occurred, and the Issuer and its subsidiaries continue to
deny
that such defaults have occurred. The alleged Defaults in the Restated Letter
Agreement are identical to those discussed in the Original Agreement. Details
regarding such Defaults are disclosed in a Current Report on Form 8-K filed
on
June 20, 2008.
The
foregoing summary of the terms and conditions of the Restated Letter Agreement
does not purport to be complete and is qualified in its entirety by reference
to
the full text of the agreement, which is attached hereto as Exhibit 10.1
and
which is incorporated herein by reference. A copy of the press release
announcing the Restated Letter Agreement is attached hereto as Exhibit 99.1
and
is incorporated herein by reference.
This
Current Report on Form 8-K contains “forward-looking statements,” as such term
is used in the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include those regarding expected cost savings, expectations for
the
future performance of our brands or expectations regarding the impact of
recent
developments on our business. When used herein, the words “anticipate,”
“believe,” “estimate,” “intend,” “may,” “will,” “expect” and similar expressions
as they relate to the Company or its management are intended to identify
such
forward-looking statements. Forward-looking statements are based on current
expectations and assumptions, which are subject to risks and uncertainties.
They
are not guarantees of future performance or results. The Company’s actual
results, performance or achievements could differ materially from the results
expressed in, or implied by, these forward-looking statements. Factors that
could cause or contribute to such differences include: (1) we may not be
able to
restructure our existing bank borrowing facility to provide our business
with
needed liquidity, (2) other potential alternatives to seek additional liquidity,
such as selling one or more of our businesses, may not be successful or may
not
generate sufficient proceeds to meet our liquidity needs, including our debt
service obligations, (3) the businesses that we have acquired may not be
successful, may involve unanticipated costs or difficulties or delays in
being
integrated with our existing operations, or may disrupt our existing operations,
(4) we may not be successful in operating or expanding our brands or integrating
our acquisitions into our overall business strategy, (5) any failure to meet
our
debt obligations would adversely affect our business and financial conditions,
and our need for additional near-term liquidity could result in a sale of
one or
more of our businesses at less than an optimal price or an inability to continue
to operate one or more of our businesses, (6) our marketing, licensing and
franchising concepts and programs may not result in increased revenues,
expansion of our franchise network or increased value for our trademarks
and
franchised brands, (7) we depend on the success of our licensees and franchisees
for future growth, (8) our near-term liquidity needs and the impact of our
failure to file our required periodic reports on a timely basis may adversely
affect our ability to retain existing, or attract new, employees, franchisees,
and licenses, (9) our near term liquidity needs may be higher or lower than
our
current expectations and (10) other factors discussed in our filings with
the
Securities and Exchange Commission. The Company undertakes no obligation
to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Item
9.01 Financial
Statements and Exhibits
(d)
Exhibits
10.1 Restated
Letter Agreement dated July 17, 2008 with BTMU Capital Corporation.
99.1 Press
release dated July 18, 2008.
SIGNATURES
According
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized on July 18, 2008.
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NEXCEN
BRANDS,
INC. |
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/s/
Kenneth J.
Hall
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By: |
Kenneth
J. Hall |
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Its: |
Executive Vice President, Chief |
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Financial Officer and
Treasurer
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