BREAKING: Finish Line bankers freeze financing

	Wednesday, September 19, 2007 1:44 PM
	Finish Line bankers freeze financing Finish Line Inc. said that this afternoon that its bankers have decided not to close on the financing for the company's $1.5 billion cash purchase of Tennessee-based Genesco Inc. until they gain a better understanding of Genesco's weakening financial condition. The move by New York-based UBS Financial Services may pressure Genesco to accept a lower price from Finish Line, which analysts fear may be overextending itself with the purchase. The Indianapolis company disclosed for the first time on Sept. 17 that UBS was threatening to back out of a "commitment letter" it signed in June to provide up to $1.6 billion in financing. UBS has the right to pull the commitment if Genesco suffers a "material adverse" change in its performance, which UBS contends may have occurred.
	"While we continue to pursue this matter in good faith, we are extremely concerned about the apparent deteriorating financial condition of [Genesco]," UBS wrote in a letter that Finish Line made public Sept. 17. Finish Line said today that UBS has submitted a letter saying it has decided to "defer any further work on the remaining closing documents" until it more closely scrutinizes Genesco's finances. Today's developments could push back the deal's closing, which had been scheduled for next month. Finish Line agreed to pay a rich price for Genesco-$54.50 a share-in part to outduel New York-based Foot Locker, which also was trying to buy it. Since then, credit markets have slid into disarray, stock markets have declined, and both Genesco and Finish Line have reported surprisingly bad summer sales. Genesco operates the shoe retailer Journeys, Hat World and other mall chains. Finish Line sought the company to diversify beyond the topsy-turvy athletic shoe and apparel business. Finish Line on Aug. 30 signaled it might try to back out, or at least negotiate a lower price. It said it was "disappointed" with the $4.2 million quarterly loss Genesco had reported earlier in the day and was "evaluating its options in accordance with the terms of the merger agreement." Analysts have expressed skepticism that either Finish Line or UBS has legitimate grounds to wiggle out of the original deal. Finish Line today said it had no further comment.
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