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Retailer Friedman's Inc reorganization plan successful

14
Dec '05

Savannah, Georgia based jewelry retailer Friedman's Inc announced that the Company's First Amended Plan of Reorganization ("Plan") became effective on December 9, marking its emergence from Chapter 11.

Friedman's has met all requirements to emerge from bankruptcy, and the implementation of the court-approved Plan brings to a conclusion the Company's financial restructuring.

In conjunction with its emergence from Chapter 11, the Company also closed on its new $125 million exit financing facility provided by CIT Group, Inc. (the "CIT Exit Facility").

The CIT Exit Facility has a five-year term and will be used to fund payments to be made in accordance with the Company's court approved Plan, for ongoing working capital needs, and for general corporate purposes.

Consistent with the Plan confirmed by the U.S. Bankruptcy Court on November 23, 2005, Friedman's previously outstanding common stock has been cancelled. New common stock has been issued under an Investment Agreement with Friedman's Plan sponsor, Harbert Distressed Investment Master Fund, Ltd. ("Harbert").

Harbert invested significant amounts in Friedman's capital structure while the Company was in Chapter 11. In exchange for the conversion of all of Harbert's Chapter 11 claims and other interests in Friedman's and an additional $25 million incremental equity investment under the Investment Agreement made as part of the Plan closing, Harbert received substantially all of the capital stock of reorganized Friedman's.

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