Imperial Industries (IPII) Terminates & Discontinues All Operations of its Subsidiary, Just-Rite Supply

June 11, 2009 4:35 PM EDT

Imperial Industries, Inc. (Nasdaq: IPII) announced that the Company's subsidiary Just-Rite Supply, Inc. ("Just-Rite") has terminated and discontinued all operations of its distribution facilities. In connection therewith, Just-Rite entered into an Assignment for the Benefit of Creditors in which all assets of Just-Rite, subject to any liabilities thereof, were transferred to an Assignee to sell and liquidate for the benefit of creditors pursuant to Florida State Law. The Company will continue to operate its manufacturing subsidiary, Premix-Marbletite Manufacturing Co.

As a result of the execution of the Assignment for the Benefit of Creditors, the Company entered into a Forbearance Agreement with its commercial lender. The Forbearance Agreement ends on August 31, 2009. The Forbearance Agreement, among other matters, provides for the lender's continued funding under its credit facility notwithstanding the Assignment by Just-Rite. However, the maximum credit amount based on eligible collateral was immediately reduced from $3,500,000 to $2,500,000 until June 21, 2009, and thereafter will be reduced $200,000 each week until the maximum credit equals $500,000.

In addition, the amendment includes the grant of a security interest in additional collateral, increased the interest rate under the line of credit to, at the Company's option; either at prime rate plus 5%, or Libor plus 6%. Also, the amendment further reduced the Company's borrowing capacity, by lowering the amount of borrowings available against eligible inventory from $1,750,000 to $1,000,000 until August 1, 2009, and then further reduced said amount to $350,000. [SM]

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