Finish Line seeks court backing on demands

September 29, 2007
Indianapolis-based retailer Finish Line Inc. said last night that it filed a request with a Tennessee court to force Genesco Inc. to turn over certain financial information and give it access to financial personnel.

Indianapolis-based Finish Line has accused the Nashville, Tenn., company of withholding access to financial information it needs to complete its $1.5 billion acquisition.

Finish Line also asked the court to declare whether a "company material adverse effect" has taken place.

In recent weeks, Finish Line and its banker, UBS Financial Services, have suggested that a $4.2 million loss suffered by Genesco in its second quarter amounts to a material adverse effect. Such an effect would give Finish Line and UBS the right to end the deal, and UBS has said it won't close until it sees more Genesco financial information.

On Sept. 21, Genesco sued Finish Line to try to force the acquisition to close. Three days later, Finish Line shot back with the charges that Genesco was withholding financial information, thus breached the agreement.

Finish Line in June beat out New York-based Foot Locker Inc. to buy Genesco. At the time, Finish Line predicted annual savings of $15 million to $20 million from the combined company.

The heavily leveraged deal would have added Journeys, Underground Station, Jarman, Hat World and Lids stores to Finish Line's base of athletic shoes and clothing.

Since June, however, the sub-prime mortgage bust accelerated and financing has become more expensive.
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