8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 20, 2006

Enesco Group, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Illinois	001-09267	04-1864170
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
225 Windsor Drive, Itasca, Illinois		60143
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 630-875-5300

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 20, 2006, Enesco Group, Inc. (the "Company") amended its existing U.S. credit facility pursuant to the Twelfth Amendment (the "Amendment") to Second Amended and Restated Senior Revolving Credit Agreement (as amended, the "Credit Agreement") among the Company, certain borrowing subsidiaries of the Company, Bank of America, N.A. (as successor by merger to Fleet National Bank), as Agent, and certain lenders party thereto, which provides for certain material changes to the Company’s Credit Agreement as follows:

Borrowing capacity. The Amendment provides for various forms of credit availability up to a maximum borrowing amount of $70 million, with a facility termination date of September 15, 2006. The Company’s borrowing availability under the credit facility is determined pursuant to various borrowing base formulae set forth in the amended Credit Agreement, and based upon levels of inventory, accounts receivable and other assets. Pursuant to the Amendment, the Company may borrow b eyond the amounts available under the borrowing base formulae. The maximum aggregate amount the Company may borrow beyond the amounts available under the borrowing base formulae ranges from $9,195,000 for the week ended July 15, 2006 to $15 million from and after the week ending August 19, 2006 until the credit facility termination date. The Amendment provides that interest on loans and advances (other than permitted borrowings in excess of the borrowing base formulae from and after the Amendment date) will accrue at the alternate base rate provided under the facility, plus 2% per annum. Interest on permitted borrowings in excess of the borrowing base formulae will accrue at the alternate base rate provided under the facility, plus 3% per annum.

Financial covenants. The Amendment deleted certain of the Company's prior financial covenants, including the minimum monthly EBITDA covenants established by the Eleventh Amendment to the Credit Agreement. In their place, the Amendment establishes additi onal covenants governing the Company's projected cash receipts, cash disbursements and borrowings in excess of borrowing base formulae. The Amendment provides for an event of default if (i) the Company's actual cash receipts for any two week period ending after the date of the Amendment are more than 15% below the Company's projected cash receipts for that two week period, (ii) the Company’s actual cash disbursements for any weekly cumulative period are more than 10% above the Company's projected cash disbursements for that weekly period or (iii) the Company borrows more than the additional authorized borrowings permitted under the Amendment.

Additional covenants. The Amendment also provides for additional covenants in which the Company undertakes to retain an investment banker to assist it in pursuing a transaction that would result in the repayment of all Company obligations under the Credit Agreement. The Company additionally agreed to obtain by August 7, 2006 a binding written commitment to such a transaction, subject to customary conditions (other than due diligence conditions), with a closing date of September 15, 2006. Although the Company recently retained a financial adviser to assist the Company in securing new financing to replace its current credit facility, there can be no assurances that the Company will be successful in obtaining such alternate financing or securing it in a timely manner. Any failure to obtain new financing as required by the Amendment would have a material adverse effect on the Company's financial condition and results of operations.

Additional collateral. Under the Amendment, the Company and its borrowing subsidiaries agreed to provide additional collateral consisting of certain intellectual property and other assets, and the stock and certain other assets of certain foreign subsidiaries.

Usage and extension fees. The material changes to the usage and extension fees as stated in the Amendment provide that, on the earlier of an event of defau lt and the date the amounts due under the Credit Agreement are paid in full or are otherwise satisfied, a fee of $2.1 million will be payable by the Company, unless the amounts due under the Credit Agreement are paid in full or are otherwise satisfied on or before September 1, 2006, in which case the fee payable by the Company will be reduced to $1.4 million. The monthly fee of 0.10% on the highest outstanding loan amount on any day during the preceding month increased to 0.20% on June 1, 2006 and will continue until the credit facility termination date.

Waivers. The Amendment also provides a waiver by the lenders to the events of default under the Credit Agreement previously disclosed by the Company in its Current Report on Form 8-K filed with the Commission on June 14, 2006.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Amendment, a copy of which will be filed as an exhibit to the Company 19;s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release, dated July 20, 2006, announcing the twelfth amendment to the credit facility.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Enesco Group, Inc.
July 21, 2006	By:	/s/ Marie Meisenbach Graul
		Name: Marie Meisenbach Graul
		Title: Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release, dated July 20, 2006, announcing the twelfth amendment to the credit facility.

EX-99.1

Exhibit 99.1

For Immediate Release

Investor Contact: Leigh Parrish
Financial Dynamics
212-850-5651
lparrish@fd-us.com

Media Contact: Donna Shaults
Enesco Group, Inc.
630-875-5464
dshaults@enesco.com

ENESCO GROUP, INC. ANNOUNCES AMENDMENT TO U.S. CREDIT FACILITY
Borrowing Availability Increased Until September 15, 2006

Itasca, Ill. – July 20, 2006 – Enesco Group, Inc., a leader in the giftware, and home and garden décor industries, today announced the Company signed a twelfth amendment to its current U.S. credit facility with Bank of America, N.A. and LaSalle Bank N.A., effective as of July 20, 2006, to increase its borrowing availability in amounts from $9 million to $15 million. With the signing of the twelfth amendment, the facility now has a termination date of September 15, 2006.

The amendment replaces most of the previous financial covenants with covenants requiring compliance (subject to permitted variances) with budgeted cash receipts, cash disbursements and loan formulas. The amendment also provides for a waiver of existing events of default under the credit agreement as of the date of the twelfth amendment and requires that the Company obtain commitments for new financing.

“The twelfth amendment to our current credit facility provides Enesco with the appropriate financing to meet the Company’s seasonal needs, as well as allows us to pursue and complete new long-term financing,” stated Marie Meisenbach Graul, Executive Vice President and Chief Financial Officer. “The amendment maintains the $70 million ceiling on our credit facility while providing us with expanded financial flexibility over the next two months.We remain focused on implementing initiatives to improve and better manage the Company’s cash flow. Managing our expenses remains our critical priority and we continue to evaluate additional opportunities for operating expense reductions.”

Further information can be found in Enesco’s Form 8-K, which is expected to be filed tomorrow with the Securities and Exchange Commission on www.sec.gov, or visit www.enesco.com under Investor Relations.

About Enesco Group, Inc.
Enesco Group, Inc. is a world leader in the giftware, and home and garden décor industries. Serving more than 44,000 customers worldwide, Enesco distributes products to a wide variety of specialty card and gift retailers, home décor boutiques, as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in the United Kingdom, Canada, Europe, Mexico, Australia and Asia. With subsidiaries located in Europe and Canada, and a business unit in Hong Kong, Enesco’s international distribution network is a leader in the industry. Enesco’s product lines include some of the world’s most recognizable brands, including Border Fine Arts, Bratz, Circle of Love, Foundations, Halcyon Days, Jim Shore Designs, Lilliput Lane, Pooh & Friends, Walt Disney Classics Collection, and Walt Disney Company, among others. Further information is available on Enesco’s web site at www.enesco.com.

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This press release may include forward-looking statements, which reflect management’s current assumptions and beliefs and are based on information currently available to management. Such forward-looking statements may be identified by use of such words as “expects,” “intends,” “anticipates,” “could,” “estimates,” “plans,” and “believes,” and similar expressions, but these words are not the exclusive means of identifying such statements. Such statements are subject to various risks, uncertainties and other factors, which could cause actual results to vary materially from those anticipated, estimated, expected or projected. Important factors that may cause actual future events or results to differ materially and adversely from those described in the forward-looking statements include, but are not limited to: Enesco’s success in implementing its comprehensive plan for operating improvement and achieving its goals for cost savings and market share increases; Enesco’s success in developing new products and consumer reaction to Enesco’s new products; Enesco’s ability to secure, maintain and renew popular licenses, particularly our Cherished Teddies, Disney and Jim Shore Designs licenses; Enesco’s ability to grow revenues in mass and niche market channels; Enesco’s ability to comply with covenants contained in its credit facility; changes in general economic conditions, as well as specific market conditions; fluctuations in demand for our products; manufacturing lead times; the timing of orders and shipments and our ability to predict customer demands; inventory levels and purchase commitments exceeding requirements based upon forecasts; collection of accounts receivable; changes in the regulations and procedures affecting the importation of goods into the United States; changes in foreign exchange rates; price and product competition in the giftware industry; variations in sales channels, product costs or mix of products sold; and, possible future terrorist attacks, epidemics, or acts of war. In addition, Enesco operates in a continually changing business environment and does not intend to update or revise the forward-looking statements contained herein, which speak only as of the date hereof. Additional information regarding forward-looking statement risk factors is contained in Enesco’s reports and filings with the Securities and Exchange Commission. In light of these risks and uncertainties, the forward-looking statements contained herein may not occur and actual results could differ materially from those set forth herein. Accordingly, you should not rely on these forward-looking statements as a prediction of actual future results.

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