March 19, 1999(ÐMorrow Snowboards, Inc. (Nasdaq: MRRW), an Oregon corporation (“Morrow”), hereby announces that the Letter of Intent with Empire of Carolina, Inc. (Amex: EMP) (“Empire”) announced on March 7, 1999 was terminated for failure to meet certain conditions. Morrow and Empire continued discussions following such termination to see if the transaction could be restructured, but were unable to agree on new financing and merger terms.
Morrow still needs additional working capital through a financing or sale of a portion of its business or assets to continue operation and pay its bank financing and existing payables. At this time, Morrow is pursuing certain proposals received subsequent to the termination of the Empire Letter of Intent. Without additional funding, Morrow would not be able to continue operations.
On March 12, 1999, Morrow received notification from its lender, Foothill Capital Corporation (“Lender”), that Morrow was in default under its credit facility due to advances exceeding the authorized credit. The Lender noted that it was imposing the “default rate” on the existing loan balances, but not taking other action at this time. Morrow is also not in compliance with certain financial covenants, including the net worth and EBITDA requirement.
Statements in this report are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties, including without limitation the continuing cooperation of Foothill, adequacy of available working capital, continuing forbearance by Foothill and other creditors, and Morrow’s ability to consummate a transaction to allow it to continue operations.