Phoenix Footwear
Completes $1,000,000 Capital Raise
CARLSBAD, Calif., July 27, 2011 -- Phoenix Footwear Group, Inc. (OTCMarkets.com: PXFG)
Phoenix Footwear Complete $1,000,000 Capital Raise
Carlsbad, California, July 27, 2011. Phoenix Footwear Group, Inc. (Pink Sheets: PXFG) (the “Company”) today reported that on July 21, 2011 it completed the sale of $1.0 million of subordinated secured 1% convertible notes (the “Notes”) to two affiliated institutional investors (collectively, the “Investors”). The Notes are initially convertible into 2,994,011 shares of the Company’s common stock. The Company plans to use the additional capital for working capital and growth initiatives. The net proceeds of the sale, after deducting estimated financing expenses, are expected to be $925,000.
"We are pleased with the financial support provided and look forward to the continued growth and success of our company and products," added James Riedman, President and CEO of Phoenix Footwear.
The Notes are due July 30, 2014 and bear interest at the rate of 1.0% per year. The interest is payable in cash semi-annually in arrears on October 31 and April 30 of each year, commencing October 31, 2011. The obligation under the Notes is secured by a pledge of substantially all of the Company’s assets, including its intellectual property assets and the stock of its wholly-owned subsidiary, Penobscot Shoe Co. The security interest of the Investors is subordinated to the rights of Gibraltar Business Capital, LLC, and Westran Industrial Loan Co., the Company’s first lien and second lien lenders, under its $5.75 million credit facility from November 2010.
As part of the transaction, the parties entered into a Voting Agreement with James Riedman and Riedman Corporation (the “Riedman Shareholders”), to provide, among other things, for the Investors and the Riedman Shareholders to each elect one member to the board of directors. The parties also entered into an Investors Agreement, which provides, among other things: registration rights; protective provisions; participation rights on new securities issuance by the Company; and a standstill agreement whereby the Investors and the Riedman Shareholders agree not to acquire additional shares of the Company without director approval.
The sale of the Notes to the Investors was made in a private placement to accredited investors under the exemption from registration provided under Securities and Exchange Commission Rule 506. Neither the Notes nor the shares issuable upon conversion are currently registered under the Securities Act of 1933, as amended (“Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The terms of the transaction are described in more detail in the Company’s Current Report dated July 27, 2011 and posted to the OTC Disclosure and News Service.
About Phoenix Footwear Group, Inc.
Phoenix Footwear Group, Inc., headquartered in Carlsbad, California, specializes in quality comfort women’s and men’s footwear with a design focus on fitting features. Phoenix Footwear designs, develops, markets and sells footwear in a wide range of sizes and widths under the brands Trotters®, and SoftWalk®. These brands are primarily sold through department stores, leading specialty and independent retail stores, mail order catalogues and internet retailers and are carried by approximately 700 customers in over 950 retail locations throughout the U.S. Phoenix Footwear has been engaged in the manufacture or importation and sale of quality footwear since 1882.
Forward-Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding expected benefits of the investment from the Investors, and/or statements preceded by, followed by or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” “exploring,” or similar expressions. Although Phoenix Footwear believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Phoenix Footwear or any other person that the objectives and plans of Phoenix Footwear will be achieved. All forward-looking statements included in this press release speak only as of the date of this press release and are based on Phoenix Footwear's current expectations and projections about future events, based on information available at the time of the release, and Phoenix Footwear expressly disclaims any obligation to release publicly any update or revision to any forward-looking statement contained herein if there are changes in Phoenix Footwear’s expectations or if any events, conditions or circumstances on which any such forward-looking statement is based.
Contact:
Phoenix Footwear Group, Inc.
Greg W. Slack
Chief Financial Officer
760-602-9688