The recently completed asset sales by Corgi International were precipitated by a shortage of cash caused by tightened credit requirements from its asset-based lender, poor sell-throughs over the holidays, and retailers with money problems, according to a statement from the company. 

Over the past few weeks, the company sold its Cards, Inc. (see “Corgi Sells Cards, Inc.”) and die-cast (see “Hornby Acquires Corgi Die-cast Business”) businesses.  The Cards, Inc. sale to Esdeviuim netted $2.25 million and $700,000 worth of inventory.  The die-cast business, which was running at only a $13 million annual rate due to the credit constraints, brought in $15 million plus $1.6 million for the inventory.

The company used the proceeds to pay down debt to its bank, an asset lender, and trade creditors.  It also opened a new asset-based credit line with less stringent terms. 

Corgi also announced that it would be shedding 65 employees, about 50% of its staff, including some that were expected to go to Hornby. 

The company’s board agreed to convert $600,000 of outstanding board fees to ADS’s (shares), and reduced board fees for the coming year by 50%.

The company also told investors that it would not hit the numbers in its prior guidance for this fiscal year.  COO/CFO Jack Lawrence also noted that the company would still need to seek additional financing, although its liquidity was significantly improved.