Sale-Leaseback Financing Overview 2 Transaction Summary Spirit Finance has acquired Casual Male’s ~755,992 square foot corporate headquarters and distribution center in Canton, MA for $57MM. Net proceeds from the sale transaction approximate $56 million, after transaction costs of approximately $1 million. Casual Male’s gain from sale of its property to Spirit Finance produced a capital gain of approximately $28 million. Casual Male has mitigated any capital gains tax liability associated with the transaction by offsetting them with a portion of its tax loss carry-forwards, leaving over $70 million in tax loss carry forwards for future use. Casual Male has entered into a 20-year lease with Spirit Finance, with 6, 5-year renewal options. Casual Male’s initial rent in years 1-5 of the lease will be $4.56 million. Casual Male will continue to operate and manage the property in the same manner as prior to the sale. Spirit Finance Casual Male $4.56MM rent $57.0MM proceeds Headquarters/DC (Canton, MA) Casual Male continues to operate / manage the property Sale of Property Long-term Lease 2 Spirit Finance Casual Male $4.56MM rent $57.0MM proceeds Headquarters/DC (Canton, MA) Casual Male continues to operate / manage the property Sale of Property Long-term Lease Exhibit 99.2 |
Sale-Leaseback Financing Use of Proceeds / Financial Statement Impact 2 Transaction Summary Use of Proceeds Will use the net proceeds of ~$56 million primarily for debt reduction and to buffer its cash position Payoff of existing mortgage, including early retirement penalty of $1 million $10.0 Reduction in bank debt (revolver and Rochester Big & Tall acquisition financing) 27.0 Partial buyback of convertible note securities 5.0 Cash increase 14.0 $56.0 Earnings Impact Transaction will be accretive in 2006 by approximately $0.02, after tax, per share as a result of: Reduced interest expense $3.6 Annual rent payments (4.6) Elimination of depreciation expense associated with the property (non-cash) 0.8 Annual amortization of GAAP gain on building reducing annual lease expense (non cash) 1.5 $1.3 Balance Sheet Impact Sale transaction will reduce debt from approximately $140 million prior to the transaction to approximately $100 million, excluding cash balances of approximately $20 million Borrowing capacity under CMRG’s $90 million revolver facility fully available Cash Flow Impact CMRG’s operating cash flow will be reduced by approximately $1.0 million CMRG’s free cash flow to be used for further debt reductions or growth activities |