CARLSBAD, Calif., Mar 25, 2010 (BUSINESS WIRE) -- Orange 21 Inc. (NASDAQ:ORNG), a leading designer, producer and distributor of sunglasses, prescription eyewear, snow and motocross goggles, and branded apparel and accessories for the action sports, motorsports, snowsports and lifestyle markets, announced today that effective March 23, 2010, its wholly owned subsidiary Orange 21 North America Inc. ("O21NA"), entered into a $3.0 million Promissory Note with one of Orange 21 Inc.'s shareholders, Costa Brava Partnership III, L.P. ("Costa Brava"). The Promissory Note is subordinated to O21NA's Loan and Security Agreement with BFI Business Finance ("BFI"), pursuant to the terms of a Debt Subordination Agreement, dated March 23, 2010, by and between Costa Brava and BFI. The proceeds from the Note are expected to be used (i) to prepay the current balance on our revolving line of credit balance with BFI in its entirety and (ii) if any proceeds remain after such prepayment, for working capital purposes. However, O21NA may continue to re-borrow from BFI under the Loan and Security Agreement after such prepayment is made.
Interest under the Promissory Note accrues daily at the following rates: (i) from the date of receipt of funds under the Promissory Note through April 30, 2010, at (A) 6% per annum on the last day of each calendar month and (B) 6% per annum payable on April 30, 2010, and (ii) from May 1, 2010 through the maturity date, at (A) 9% per annum on the last day of each calendar month and (B) 3% per annum payable on the maturity date. In addition, the Promissory Note requires that O21NA pays a facility fee of 1% of the original principal amount on December 31, 2010 and the maturity date. The Promissory Note matures on July 29, 2011. The terms of the Promissory Note include customary representations and warranties, as well as reporting and financial covenants, customary for financings of this type.
Seth Hamot, Orange 21 Inc.'s Chairman of the Board of Directors, is the President and sole member of Roark, Rearden & Hamot, LLC, which is the sole general partner of Costa Brava. Mr. Hamot commented, "We are quite pleased to help our company grow. Orange 21 and its portfolio of brands have lots of opportunity in front of them, and we look forward to being a part of that growth for a long time."
About Orange 21 Inc.
Orange 21 designs, develops, markets and produces premium products for the action sports, motorsports, snowsports and lifestyle markets under the brands Spy Optic, O'Neill and Margaritaville.
Safe Harbor Statement
This press release contains forward-looking statements. These statements relate to future events or future financial performance and are subject to risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "feel," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: the general conditions of the domestic and global economy; failure of the Promissory Note to contribute to growth of the Company; failure to successfully benefit from market and business opportunities; the possible exit of Mr. Hamot from the Board of Directors or Roark, Rearden & Hamot, LLC; our outstanding indebtedness; our ability to continue to develop, produce and introduce innovative new products in a timely manner and other risks identified from time to time in our filings made with the U.S. Securities and Exchange Commission. Although, we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results. Moreover, we assume no responsibility for the accuracy or completeness of such forward-looking statements and undertake no obligation to update any of these forward-looking statements.
SOURCE: Orange 21 Inc.
Orange 21 Inc.
A. Stone Douglass, Chief Executive Officer