Golden Books is close to completing agreements that will keep the company operating into at least early 1999. Although a definitive agreement is yet to be signed, Golden has reached a deal with noteholders -- representing approximately $100 million of the $150 million in 7.65% senior notes -- under which the noteholders have agreed to take no action against the company through February 16. Golden has been working on a standstill agreement with the noteholders since it missed an interest payment due September 15. As part of the standstill agreement, Golden's indebtedness under the senior notes will be further supported by a lien on specified additional collateral.

In addition, Golden has received a commitment letter from CIT Group that will permit the company to borrow an aggregate of up to $45 million on a secured basis. The new financing will, in part, replace the company's $30 million working capital base, which will be repaid out of a portion of the proceeds of the new loan.

In connection with the standstill and financing arrangements, Golden Press Holdings (GPH) will agree to convert its secured $10-million loan to Golden to an unsecured obligation. GPH will also waive and release the collateral it had received for the loan, in exchange for being relieved of its obligation to loan up to an additional $15 million to Golden.

GPH, comprising Warburg Pincus, Richard Snyder and Barry Diller, had agreed to loan up to $25 million to Golden earlier this fall (News, Sept. 21).Meanwhile, third-quarter results at Golden showed a minor sales decline as well as a slight increase in the company's net loss. Sales for the period fell 2.4%, to $52 million, while the net loss increased to $18.9 million, from $17.9 million. Company chairman Dick Snyder, while acknowledging that 1998 "has been the most difficult of years in all aspects of our company," nevertheless insisted that Golden was "making good progress in improving our gross margins, which will be reflected in 1999, and reducing our selling, general and administrative expenses."

For the first nine months of the year, sales at Golden fell 16.6%, to $141.7 million, and the net loss deepened to $70.4 million from $38.1 million.