* Broder Bros reaches deal to refinanced senior notes
* Reduces risk of financial hit to Gildan
* Gildan shares rise 7.3 percent
TORONTO, April 16 (Reuters) - Gildan Activewear’s (GIL.TO) shares climbed more than 7 percent on Thursday as one of its key U.S. distributors escaped bankruptcy proceedings, lessening fears that the Montreal-based T-shirt maker would take a big financial hit.
Broder Bros, which represents about 23 percent of Gildan’s 2008 sales in the U.S. screenprint business, reached an agreement with a group of lenders to refinanced its senior notes.
The agreement, which gave the lenders a 95 percent equity stake in Broder, still requires approval from all note holders, but Martin Landry, an analyst at Desjardins Securities in Montreal, said the deal would help Broder earn enough cash to survive.
“We believe that this announcement will be viewed as favorable by investors as it will remove most of the overhang created by the uncertainty of Broder Bros’s weak financial situation,” Landry said in a note to investors.
“However, we expect that some uncertainty will remain until all note holders accept the proposition.”
Gildan sells blank T-shirts, sport shirts and fleece to wholesale distributors to be decorated by screen printers.
The company’s shares were up 7.3 percent at C$14.48 on the Toronto Stock Exchange by mid-afternoon after rising as high as C$14.58 earlier in the day.
The stock has fallen 62 percent in the past year on weak demand and tighter credit markets.
$1=$1.21 Canadian Reporting by Scott Anderson; editing by Rob Wilson