ACTON, Mass.--(BUSINESS WIRE)--Nov. 5, 1998--CML Group, Inc.
(NYSE:CML) announced today that the Company's NordicTrack subsidiary
has filed for protection under Chapter 11 of the U. S. Bankruptcy
Code. NordicTrack will move quickly to wind down its business
operations and sell its assets.
Separately, CML has reached an agreement with its secured lenders
to amend its credit facility and to provide CML with a forbearance
period through January 31, 1999. CML's secured creditors have also
agreed to continued credit availability for its profitable Smith &
Hawken subsidiary during the forbearance period. During this period,
CML will seek to recapitalize so as to reduce its debt load and
provide its Smith & Hawken subsidiary with additional working capital.
John Pound, Chairman and Chief Executive Officer of CML, said:
"Over the past nine months, we have explored a wide range of
alternatives for NordicTrack. We aggressively investigated sale
opportunities while also working to restructure the company, cut
costs, and reposition it as a viable specialty retailer of fitness
products. There was no meaningful acquisition interest that we could
uncover in NordicTrack in its present configuration and given its
troubled results. This fall, NordicTrack's results began to
deteriorate very rapidly and unexpectedly relative to its plan. Based
upon this development, we were forced to act quickly to contain the
situation and eliminate further losses."
Mr. Pound continued: "We will seek to reap the highest price for
NordicTrack's assets. Concurrently, we will seek to further balance
our capital structure through a potential reduction of debt and
infusion of equity. We have engaged BancBoston Robertson Stephens Inc.
to assist us in pursuing opportunities for raising equity capital and
they are working aggressively to explore these opportunities."
Mr. Pound further continued: "Our secured creditors understand
Smith & Hawken's potential value and have indicated that they will
work with us as we seek to establish a new capital structure. Smith &
Hawken has been operating under difficult circumstances due to CML's
overall financial condition, and has none the less been healthy,
profitable and growing. We continue to believe that it represents the
best brand in the home and garden industry. With the NordicTrack
situation resolved, our goal is to balance our capital structure and
position Smith & Hawken for growth.
CML also announced that in light of NordicTrack's bankruptcy
filing, William E. Shepard, President of its NordicTrack division,
resigned from the CML Board of Directors effective today.
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