================================================================= WARNACO BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) June 12, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- WARNACO BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, On an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction of WARNACO BANKRUPTCY NEWS is prohibited without permission. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO WARNACO BANKRUPTCY NEWS [00001] BACKGROUND & DISCRIPTION OF THE WARNACO GROUP [00002] COMPANY'S BALANCE SHEET AT APRIL 7, 2001 [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING [00004] WARNACO DEBTORS' CHAPTER 11 DATABASE [00005] LIST OF WARNACO'S 30 LARGEST UNSECURED CREDITORS [00006] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF PROCEEDINGS [00007] DEBTORS' MOTION FOR APPROVAL OF $600,000,000 DIP FACILITY KEY DATE CALENDAR ----------------- 06/11/01 Voluntary Petition Date 06/26/01 Deadline for filing Schedules of Assets and Liabilities 06/26/01 Deadline for filing Statement of Financial Affairs 06/26/01 Deadline for filing Lists of Leases and Contracts 07/01/01 Deadline to provide Utilities with adequate assurance 08/10/01 Deadline to make decisions about lease dispositions 09/09/01 Deadline to removal actions pursuant to F.R.B.P. 9027 10/09/01 Expiration of Debtors' Exclusive Plan Proposal Period 12/08/01 Expiration of Debtors' Exclusive Solicitation Period 06/11/03 Deadline for Debtors' Commencement of Avoidance Actions 06/11/03 Expiration of $600,000,000 DIP Financing Facility Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO WARNACO BANKRUPTCY NEWS ----------------------------------------------------------------- WARNACO BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving WARNACO BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990. Currently, we provide similar coverage about the chapter 11 cases involving Fruit of the Loom, Pillowtex, Pacific Gas and Electric Company, The FINOVA Group, Inc., Owens Corning, Armstrong World Industries, LTV, Wheeling- Pittsburgh, W.R. Grace & Co., Safety-Kleen, Bridge Information Services, Winstar, ICG Communications, Lernout & Hauspie & Dictaphone, Imperial Sugar, Vlasic Foods, The Loewen Group International, Inc., Harnischfeger Industries, Inc., Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute & Mariner Health, and Integrated Health Services. ================================================================= [ ] YES! Please enter my personal subscription to WARNACO BANKRUPTCY NEWS. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- ----------------------------------------------------------------- [00001] BACKGROUND & DISCRIPTION OF THE WARNACO GROUP ----------------------------------------------------------------- THE WARNACO GROUP, INC. 90 Park Ave. New York, NY 10016 Telephone (212) 661-1300 Fax (212) 687-0480 The Warnaco Group, Inc., is a leading manufacturer of intimate apparel, menswear, jeanswear, swimwear, men's and women's sportswear, better dresses, fragrances and accessories sold under such brands as Warner's, Olga, Van Raalte, Lejaby, Weight Watchers, Bodyslimmers, Izka, Chaps by Ralph Lauren, Calvin Klein men's, women's, and children's underwear, men's accessories, and men's, women's, junior women's and children's jeans, Speedo/ Authentic Fitness men's, women's and children's swimwear, sportswear and swimwear accessories, Polo by Ralph Lauren women's and girls' swimwear, Oscar de la Renta, Anne Cole Collection, Cole of California and Catalina swimwear, A.B.S. Women's sportswear and better dresses and Penhaligon's fragrances and accessories. Warnaco operates in three business segments: * Sportswear and Accessories -- about 54% of annual revenue; * Intimate Apparel -- approximately 36% of annual revenue; and * Retail Stores -- accounting for about 10% of annual revenue; Warnaco Group products are distributed to over 20,000 customers operating more than 50,000 department, specialty and mass merchandise stores, including Dayton-Hudson, Macy's and other units of Federated Department Stores, J.C. Penney, The May Department Stores, Kohl's, Sears, Kmart and Wal-Mart and Canadian retailers The Hudson Bay Company and Zeller's. The Company's products are also distributed to such leading European retailers as House of Fraser, Harrods, Galeries Lafayette, Au Printemps, Karstadt, Kaufhof and El Corte Ingles, and to leading Mexican retailers such as Palacio De Hierro and Liverpool. The Company has expanded its brand names throughout the world by increasing the activities of its wholly-owned operating subsidiaries in Canada, Mexico, Europe and Asia. International operations generated $360 million, or 16% of the Company's $2.25 billion of net revenues in fiscal 2000. The Company has subsidiaries in Canada and Mexico in North America and in the United Kingdom, France, Belgium, Ireland, Spain, Italy, Austria, Switzerland, the Netherlands and Germany in Europe and Hong Kong and Japan in Asia, which engage in sales, manufacturing and marketing activities. The Company's products are manufactured principally in facilities located in North America, Central America, the Caribbean Basin, France, Ireland, Morocco (through a joint venture), the Philippines, Sri Lanka and the People's Republic of China (also through a joint venture). The Company maintains warehousing facilities in Canada, Mexico, the United Kingdom, France and Costa Rica and in the Netherlands (through a joint venture). As of December 30, 2000, the Company and its subsidiaries employed 21,440 employees. Approximately 25% of the Company's employees, all of whom are engaged in the manufacture and distribution of its products, are represented by labor unions. The Company considers labor relations with employees to be satisfactory and has not experienced any significant interruption of its operations due to labor disagreements. ----------------------------------------------------------------- [00002] COMPANY'S BALANCE SHEET AT APRIL 7, 2001 ----------------------------------------------------------------- THE WARNACO GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS As of April 7, 2001 ASSETS Current assets: Cash $ 55,452,000 Accounts receivable less reserves of $83,294,000 280,062,000 Inventories 502,424,000 Other current assets 28,561,000 Deferred income taxes 7,384,000 -------------- Total current assets 873,883,000 Property, plant and equipment (net of accumulated depreciation of $207,699,000) 316,276,000 -------------- Other assets: Other assets - net 365,424,000 Excess of cost over net assets acquired - net 848,192,000 Deferred income tax 136,929,000 -------------- Total other assets 1,350,545,000 -------------- $2,540,704,000 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $1,816,745,000 Short-term debt 87,000 Accounts payable 383,324,000 Accrued liabilities 64,443,000 Accrued interest 80,476,000 Accrued income tax payable 11,466,000 -------------- Total current liabilities 2,356,541,000 -------------- Long-term debt -- -------------- Other long-term liabilities 45,637,000 -------------- Company-Obligated Mandatorily Redeemable Convertible Preferred Securities ($120,000 - par value) of Designer Finance Trust Holding Solely Convertible Debentures 103,512,000 -------------- Stockholders' equity: Common stock: $.01 par value 654,000 Additional paid-in capital 912,983,000 Accumulated other comprehensive loss (14,372,000) Deficit (545,104,000) Treasury stock, at cost (313,840,000) Unearned stock compensation (5,307,000) -------------- Total stockholders' equity 35,014,000 -------------- $2,540,704,000 ============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING ----------------------------------------------------------------- NEW YORK, New York -- June 11, 2001 -- The Warnaco Group, Inc. (NYSE: WAC) announced today that the Company, and certain of its subsidiaries, have voluntarily petitioned for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. The Company's international subsidiaries, including operating entities in Canada, Mexico, Europe, Latin America and Asia, will be largely unaffected by the filing. While operating under the protection of Chapter 11, the Company will seek to increase operating liquidity and continue the operational and financial restructuring it began in 2000. The combination of a general economic downturn, a softening retail environment, an increasingly competitive industry and the Company's debt obligations all contributed to the need for the filing. The Company has conducted a thorough and careful review of all of its available options and has concluded that a reorganization under Chapter 11 is the only way to secure additional operating liquidity, stabilize the Company, and maintain sufficient flexibility to restructure its debt and continue its operating turnaround. Warnaco announced today that it has secured a commitment of $600 million Debtor-in-Possession (DIP) financing from a consortium of banks led by Citibank, J.P. Morgan Chase and The Bank of Nova Scotia, subject to bankruptcy court approval. The Company emphasized that during the voluntary restructuring process, day-to-day business operations will continue uninterrupted. The Company believes that the financing package will, among other things, provide ample funding to maintain normalized business with its vendors post-petition and maintain uninterrupted distribution of its products to its customers. We are very pleased to have received the commitment for a $600 million DIP line to finance our ongoing operations and support our portfolio of world-class brands as we reorganize our business, said Linda J. Wachner, Chairman and Chief Executive Officer of Warnaco. With this new financing and our experienced management team, we now have the elements in place to put Warnaco back on the track toward financial stability. The addition of Tony Alvarez to the management team this past month as Chief Restructuring Officer brings extensive restructuring and reorganization expertise to successfully complete this process. Tony Alvarez is a Founding Managing Director of Alvarez & Marsal, Inc. Mr. Alvarez has served as a turnaround manager or consultant for a number of companies across a variety of industries. ----------------------------------------------------------------- [00004] WARNACO DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- LEAD DEBTOR: The Warnaco Group, Inc. DEBTOR-AFFILIATES FILING SEPARATE CHAPTER 11 PETITIONS: 184 Benton Street Inc. A.B.S. Clothing Collection, Inc. Abbeville Manufacturing Company AEI Management Corporation Authentic Fitness Corporation Authentic Fitness On-Line, Inc. Authentic Fitness Products, Inc. Authentic Fitness Retail Inc. Blanche, Inc. CCC Aquisition Corp. CCC Acquisition Realty Corp C.F. Hathaway Company Calvin Klein Jeanswear Company CKJ Holdings, Inc. CKJ Sourcing, Inc. Designer Holdings Ltd. Gregory Street, Inc. Jeanswear Holdings, Inc. Kai Jay Manufacturing Company Myrtle Avenue, Inc. Outlet Holdings, Inc. Outlet Stores, Inc. Penhaligon's By Request, Inc. Rio Sportswear, Inc. Ubertech Products, Inc. Ventures Ltd. Warmana Limited Warnaco Inc. Warnaco International, Inc. Warnaco International, LLC Warnaco Men's Sportswear Inc. Warnaco of Canada Company Warnaco Puerto Rico, Inc Warnaco Sourcing, Inc. Warnaco U.S., Inc. Warnaco Ventures Ltd. Warners de Costa Rica Inc. CHAPTER 11 PETITION DATE: June 11, 2001 COURT: United States Bankruptcy Court Southern District of New York One Bowling Green New York, NY 10004 CASE NUMBERS: 01-41643-rlb through 01-41680-rlb, inclusive JUDGE: The Honorable Richard L. Bohanon OFFICER SIGNING DEBTOR'S PETITION: Stanley P. Silverstein Vice President, General Counsel & Secretary DEBTORS' BANKRUPTCY COUNSEL: Kelley Ann Cornish, Esq. Elizabeth McColm, Esq. J. Ronald Troust, Esq. Sidley, Austin Brown & Wood 875 Third Avenue New York, NY 10021 (212) 906-2000 Fax (212) 906-2021 DEBTORS' SPECIAL CORPORATE COUNSEL: John Wm. Butler, Jr., Esq. Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Chicago, IL 60605 (312) 407-0700 Fax (312) 407-0411 DEBTORS' SPECIAL CANADIAN COUNSEL: David J. Kee, Esq. Blake, Cassels & Graydon LLP Box 25, Commerce Court West 199 Bay Street, 28th Floor Toronto, Ontario CANADA M5L 1A9 (416) 863-2400 Fax (416) 863-2653 DEBTORS' SPECIAL INTELLECTUAL PROPERTY COUNSEL: Karen Artz Ash, Esq. Rosenman & Colin LLP 575 Madison Avenue New York, NY 10022 (212) 940-8800 Fax (212) 940-8776 ----------------------------------------------------------------- [00005] LIST OF WARNACO'S 30 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ The Bank of New York Convertible $120,000,000 Attn: Julie Salovitch- Subordinated Miller Debenture 101 Barclay Street New York, NY 10286 Tel:(212) 815-5359 Fax:(212) 815-5915 Amster Rothsein Attorneys fees and $3,240,339 & Ebnstein cost Attn: Nancy Coron 90 Park Avenue New York City, NY 10016 Tel: (212) 697-5995 Fax: (212) 286-0854 Charbet Trade Vendor $1,918,941 Attn: David Casty 299 Church Street Alton, RI 02894 Tel: (617) 968-0219 Fax: (401) 364-3390 Green Orange Trade Vendor $1,711,757 Attn: Agnes 2811 Sierra Pine Avenue Los Angeles, CA 90023 Tel: (323) 264-0210 Fax: (323) 264-1456 Miliken & Co. Trade Vendor $1,242,884 Attn: Kevin Cummins 1045 Sixth Avenue New York, NY 10018 Tel: (212) 819-4214 ext. 4279 Fax: (212) 819-4279 Liberty Fabrics Trade Vendor $943,988 Attn: Richard Hubbard PO Box 651440 Charlotte, NC 28265-1440 Tel: (540) 832-2261 ext. 3715 Fax: (540) 672-9091 Elastic Corp. Trade Vendor $563,342 Attn: Edward Gleadall PO Box 100270 Atlanta, GA 30384-0270 Tel: (800) 633-4538 Fax: (205) 669-8616 Kentucky Textiles, Inc. Trade Vendor $549,914 Attn: Rick Hicks One 20th Street Paris, KY 40361 Tel: (859) 987-5228 Fax: (859) 987-8375 TKO Apparel, Inc. Trade Vendor $545,810 Attn: James D. Tate or Richard Khon 1175 NE 125th Street North Miami, Florida 3316-1305 Tel: (305) 891-1107 Fax: (305) 891-2577 HIS Equipment Services Equipment Supplier $514,178 PO Box 191156 Brooklyn, NY 112169 Tel: (718) 435-222 Fax: (718) 435-0335 Systech Solutions, Inc. Trade Vendor $498,439 Attn: Sudha Gullapudi 550 N Brand STE 1200 Glendale, CA 91203 Tel: (818) 550-9690 Fax: (818) 550-9692 Affiliated Temporary Help Temporary labor $449,301 Attn: Allen provider 4359 Florence Ave. Bell, CA 90201 Tel: (213) 771-1383 Fax: (213) 771-8300 Nemanco Inc. Trade Vendor $420,098 Attn: Don Fulton PO Box 268 Philadelphia, MS 39350 Tel: (601) 656-7361 Fax: (601)656-7645 Blue Shield California Insurance Provider $406,404 Attn: Legal Dept. 50 Beale Street San Francisco CA 94105 Tel: (415) 229-500 Santa Fe Footwear Corp. Trade Vendor $358,331 Attn: Jane Jone 14850 Spring Ave. Santa Fe springs, CA 90670 Tel: (562) 802-0680 Fax: (562) 802-0850 Galey & Lord Industries Trade Vendor $327,188 Attn: Jim Webber PO Box 651440 Charlotte, NC 28275-1200 Tel: (212) 465-3008 Fax: (212) 465-3025 Noyon, Inc. Trade Vendor $327,188 Attn: Stacey Myer 45 West 34th Street Suite 400 New York, NY 10001 Attn: Stacey Myer Tel: (212) 971-0160 Fax: (212) 971-0175 Insolito Srl Trade Vendor $320,378 Attn: Michael St John Corso Italia 49 20122 Milano, Italy Tel: 011 390258315270 Fax: 011 390258315369 UPS Consolidated Shipping $313,577 643 West 43rd Street 8th Floor New York, NY 10036 Tel: (800) 742-5877 Pro Staff Temporary labor $307,591 Attn: Justine Audiss provider File # 56026 Los Angeles, CA 90074-7707 Tel: (562) 795-7707 Fax: 795-7710 Sights Denim Systems Inc. Trade Vendor $306,868 PO Box 88264 / Dept Y Chicago, IL 60680-1264 Tel: (270) 826-0647 Connecticut General Insurance Provider $293,789 Life Insurance (CIGNA) PO Box 360201 Pittsburgh, PA 15251-6201 Tel: (860) 534-8830 Keystone Health Plan West Employee Benefits $277,826 120 5th Avenue Provider Pittsburgh, PA Tel: (412) 544-700 Computer General Solutions Trade Vendor $267,494 Attn: Rita Kagan PO Box 19153A Newark, NJ 07195-9153 Tel: (212) 408-3892 Fax: (212) 977-7474 Kaiser Foundation-Hawaii Insurance Provider $263,586 711 Kapiolani Blvd Honolulu, HI Tel: (808) 591-5955 Xerox Equipment Provider $252,394 Attn: Fabian Lara PO Box 827598 Philadelphia, PA 19182-7598 Tel: (773) 380-3231 Fax: (773) 380-3120 Cananwill Inc. Trade Vendor $213,708 Lawson Software Trade Vendor $204,122 Pakias Transport, Inc. Trucking $200,140 Plastiform Trade Vendor $194,313 ----------------------------------------------------------------- [00006] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF PROCEEDINGS ----------------------------------------------------------------- The Debtors ask, pursuant to Rule 1015(b)(4) of the Federal Rules of Bankruptcy Procedure, that the Court order their chapter 11 cases be jointly administered. Administration of one bankruptcy case on the Court's dockets, Kelley Ann Cornish, Esq., at Sidley, Austin Brown & Wood explains, will reduce costs and facilitate a more efficient administrative process, unencumbered by the procedural problems otherwise attendant to the administration of multiple chapter 11 cases. Mr. Cornish notes that Warnaco's foreign subsidiaries are excluded From these filings and are not expected to file; they continue Operating with their normal business practices and financial obligations. At the First Day Hearing, Judge Gonzalez directed that the Debtors' chapter 11 cases be consolidated, solely for administrative purposes, and that all pleadings and papers be captioned: UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - x : In re : Chapter 11 : THE WARNACO GROUP, INC., et al., : Case Nos. 01-41643 (RLB) : through 01-41680 (RLB) Debtors. : : (Jointly Administered) - - - - - - - - - - - - - - - - - - x At the First Day Hearing, Judge Gonzalez made it clear that his Order neither contemplates a substantive consolidation of the Debtors' estates nor prejudices the right of any party-in- interest to seek a substantive consolidation of the Debtors' estates. ----------------------------------------------------------------- [00007] DEBTORS' MOTION FOR APPROVAL OF $600,000,000 DIP FACILITY ----------------------------------------------------------------- Prior to the Petition Date, the Debtors obtained funding for their day-to-day working capital needs that certain Amendment, Modification, Restatement and General Provisions Agreement, dated as of October 6, 2000, by and among Warnaco, Warnaco Inc., certain of Warnaco's subsidiaries, Scotiabank and Citibank, as Debt Coordinators, Scotiabank, as Administrative Agent, and State Street Bank and Trust Company, as Collateral Trustee and the Pre- Petition Lenders named therein. The Pre-Petition Lenders made loans and advances, issued letters of credit and provided other financial accommodations to the Debtors. In connection with the Pre-Petition Facility Agreement, the Debtors and the Pre-Petition Lenders entered into an Intercreditor Agreement, dated as of October 6, 2000, by and among Warnaco, Warnaco Inc., certain of Warnaco's subsidiaries, the Pre-Petition Facility Agents, Societe Generale, as Security Agent, the lead arrangers and arrangers named therein, and the Pre-Petition Lenders. The Debtors admit that, as of the Petition Date, they owe $2,413,000,000 to the Pre-Petition Lenders pursuant to the Pre- Petition Covered Facilities, plus interest thereon and fees and expenses incurred in connection therewith as provided in the Pre- Petition Financing Documents. To secure the Pre-Petition Indebtedness, the Debtors granted to the Collateral Trustee, as defined in the Pre-Petition Facility Agreement, on behalf of and for the benefit of the Pre-Petition Agents and the Pre-Petition Lenders, pursuant to various security agreements, pledge agreements, mortgages and other agreements, pledges, liens and security interests, subject to certain exclusions, in substantially all of their personal property and other assets, wherever located, then owned or thereafter acquired or arising, and the proceeds, products, rents and profits of all of the foregoing. Further, the Debtors, other than Warnaco Canada jointly and severally unconditionally guaranteed all obligations under the Pre-Petition Financing Documents. Antonio Alvarez at Alvarez & Marsal, serving as the Debtors' Chief Restructuring Officer, explains that Warnaco faces an immediate and critical need exists for the Debtors to obtain funds in order to continue the operation of their businesses. Without new financing, the Debtors will not be able to pay their payroll and other direct operating expenses and obtain goods and services needed to carry on their businesses during this critical period in a manner that will avoid irreparable harm to the Debtors' estates. At this time, the ability of the Debtors to finance their operations and the availability to them of sufficient working capital and liquidity through the incurrence of new indebtedness for borrowed money and other financial accommodations are vital to the confidence of the Debtors' vendors and suppliers of other goods and services, to their customers and employees and to the preservation and maintenance of the going concern value of the Debtors' estates. The Debtors are unable to obtain the financing they need on an unsecured basis. Substantially all of the Debtors' assets are subject to the Pre-Petition Liens. Moreover, the Pre-Petition Lenders object to (i) non-consensual priming of the Pre-Petition Liens and (ii) the Debtors' use of their Pre-Petition Cash Collateral without their consent. The Pre-Petition Agents and the Pre-Petition Lenders are willing to consent and agree to the Debtors' entering into the financing arrangements under the terms of a New Post-Petition Financing Facility under which a consortium of banks led by Citibank, J.P. Morgan Chase and The Bank of Nova Scotia agree to provide up to $600,000,000 of new Post-Petition Financing in two Tranches: (1) Tranche A -- a $375,000,000 Revolving Facility, including a $200,000,000 subfacility to back letters of credit; and (2) Tranche B -- a $225,000,000 Reducing Revolving Facility to be paid-down by $50,000,000 on June 30, 2002, and $25,000,000 each quarter thereafter; through June 11, 2003, in exchange for Post-Petition Liens, Adequate Protections Liens and super-priority claims and other protections granted under the terms of a Post-Petition Credit Agreement and various Post-Petition Financing Documents approved by the Court pursuant to 11 U.S.C. Sec. 364. Warnaco's Availability under the DIP Facility is subject to a Borrowing Base limitation calculated as the sum of: 75% of Eligible Receivables; 67% of Eligible Finished Inventory; 55% of Raw Materials; 50% of In-Transit Goods subject to Letters of Credit; and 25% of Work in Process. On an interim basis, through the time of a Final DIP Financing Hearing on July 9, 2001, the Post-Petition Lenders agree to make up to $375,000,000 available to the Debtors. At the First Day Hearing, Judge Gonzalez granted the Debtors interim authority to borrow up to $375,000,000. The Post-Petition Lenders will receive all Cash Collateral collections (from collections or sales of inventory and accounts receivable), those funds will be used to pay-down $150,000,000 of the Lenders' Pre-Petition Loans and the Lenders will re-advance the $150,000,000 during this interim period. As adequate protection in accordance with sections 363(e) and 364(d) of the Bankruptcy Code, the Post-Petition Agent is granted for the sole benefit of the Pre-Petition Agents and the Pre- Petition Lenders valid, binding, enforceable and perfected Liens in all Post-Petition Collateral (including recoveries by the Estates for preferences, fraudulent conveyances, and other avoidance power claims under Chapter 5 of the Bankruptcy Code). The Lenders' Liens are subject only to existing senior liens and a $10,000,000 Carveout for payment of the Debtors' and Committee's Professionals' fees and expenses and unpaid fees of the clerk of the Bankruptcy Court and of the United States Trustee pursuant to 28 U.S.C. Sec. 1930. Any statutory Committee is granted a 60-day window to contest the validity, perfection, priority or enforceability of the Pre-Petition Indebtedness or the Pre-Petition Liens, or to assert or prosecute any action for preferences, fraudulent conveyances, other avoidance power claims or any other claims or causes of action against any of the Pre-Petition Lenders or any of the Pre-Petition Agents, with one restriction: fees and expenses related to that litigation won't be funded by the Lenders. The Lenders collect a variety of fees under the DIP Facility, including: $9,000,000 Upfront Closing Fee; 3,000,000 Arrangement and Syndication Fee; 3,000,000 Tranche A Commitment Fee; 4,500,000 Tranche B Commitment Fee; 100,000 Annual Administration Fee; 100,000 Annual Collateral Monitoring Fee; Objections to entry of a Final DIP Financing Order must be filed with the Court by July 2, 2001, and must be served on: (a) Counsel to the Debtors: Sidley Austin Brown & Wood 875 Third Avenue New York, New York 10022 Attention: J. Ronald Trost, Esq. (b) Counsel to the Post-Petition Lenders: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Brian S. Rosen, Esq. (c) Counsel to the Pre-Petition Agent & Lenders: Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Attention: James L. Garrity, Esq. (d) the Office of the United States Trustee; and (e) any statutory committee appointed in these cases. Judge Bohanon will convene a Final DIP Financing Hearing on July 9, 2001, to consider entry of an order allowing the Debtors access to the full $600,000,000 available under the DIP Facility. *** End of Issue No. 1 ***