TORONTO (Reuters) - Toymaker Mega Brands
"We're looking at different alternatives to improve our financial position and those discussions and those different alternatives are being pursued concurrently," Marc Bertrand, president and chief executive, said on a conference call with analysts.
Bertrand declined to say whether those alternatives included the sale of the Montreal-based company or its Rose Art division, which it purchased in 2005.
"We are looking for really a financing solution to our capital structure," he said.
Mega Brands is still recovering from a huge recall of its Magnetix toys, which began in 2006 and expanded in 2007. One child died and 27 were seriously injured after swallowing small, powerful magnets that came loose from the magnetic toys, which were acquired as part of the Rose Art takeover.
In March 2008, it announced two separate recalls after reports of magnets coming loose from several toys manufactured in China. The company decided to downsize operations in the former Rose Art plant in China and outsource production.
Earlier this year Mega Brands struck a deal with its lenders that saw them agree to waive some conditions on its credit facilities. The agreement applied to credit facilities maturing in 2012, and also relaxed some covenants pertaining to minimum EBITDA levels.
Bertrand said the company, which had some $295.7 million in long-term debt as of September 30, was in line with its covenants.
Mega Brands' stock, which has slipped 47 percent in the past year because of the financial struggles, was up 15.3 percent, at 98 Canadian cents, with more than 1.1 million shares changing hands.
Earlier on Friday the company said it earned $72 million, or $1.22 a share, for the third quarter. That compared with a year-earlier loss of $122.1 million, or $3.34 a share, which included a $150 million pre-tax charge for impairment of goodwill and other assets.
Excluding one-time items, it earned $6.9 million, or 14 cents a share, in the latest quarter.
Revenue dropped 26.7 percent to $118 million.
Earlier this week Mega Brands said it had settled legal actions related to Rose Art, which it bought from the Rosen family in 2005.
Under the settlement, Mega Brands received $17.2 million and dropped a $200 million counterclaim against the Rosens.
($1=$1.05 Canadian)
(Reporting by Scott Anderson; editing by Rob Wilson)
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