Parent Co. in cash crisis
By Staff -- Gifts and Dec, 12/19/2008 3:08:00 PM
DENVER—Publicly held online toy and infant products retailer The Parent Company has announced that falling revenue has put it in a position that raises “substantial doubt” about the company’s ability to fund its operations.
In a Dec. 17 SEC filing, the e-tailer said its revenue drop—specifics of which were not announced—was the result of “recent industry and macroeconomic conditions, including weak consumer confidence and spending, along with credit limitations imposed by the registrant's vendors and lenders, which has resulted in our being unable to obtain appropriate levels of inventory to support consumer demand through the holiday season. These developments impact [The Parent Co.’s] liquidity and consequently raise substantial doubt about the [The Parent Co.'s] ability to continue as a going concern.”
Earlier this month The Parent Co. defaulted on its credit agreement with The CIT Group/Business Credit and said it did not have the ability to repay an overadvance on that agreement.
The company’s chief financial officer, Barry Hollingsworth, has since been placed on administrative leave.
In its recent SEC filings, The Parent Co. said it continues to pursue “a variety of strategic initiatives and restructuring alternatives, including a potential sale of all or a portion of its business, and/or seeking protection of the bankruptcy courts.”
The Parent Co.’s subsidiaries include BabyUniverse, eToys Direct, PoshTots, Dreamtime Baby and My Twinn. eToys Direct operates KBtoys.com.
On December 12, CIT assigned its outstanding loans to The Parent Co. to D. E. Shaw Laminar Portfolios in return for $11.9 million, a figure representing the outstanding principal balance of such loans, together with accrued and unpaid interest, and related fees.
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