Cherokee Fails to Make $8.2-Million Payment

Cherokee Inc., a struggling apparel maker based in Sunland, said it failed to make an $8.2-million interest payment due on $105 million of junk bonds it has outstanding.

The company previously had said it might not make the payment, which was due Nov. 1, because the payment might further deteriorate its balance sheet. Cherokee, meanwhile, is negotiating with holders of the junk bonds--known formally as senior subordinated notes that cost Cherokee 15.5% in annual interest--to restructure the debt.

Nonetheless, Standard & Poor’s Corp. downgraded its ratings on the notes and on $16.4 million of another of Cherokee’s debt securities, its senior subordinated debentures, to “D” from “CC.” The “D” rating is S&P;’s grade for securities in default.

Cherokee noted that it has a 30-day grace period to make the interest payment before it is formally in default. Also, the company said it retained Jefferies & Co., a unit of the Los Angeles investment firm Jefferies Group Inc., as its financial adviser.