This excerpt taken from the HBI 10-K filed Sep 28, 2006.
As a result of our substantial indebtedness, we may not have sufficient funding for our operations and capital requirements.
We paid $2.4 billion of the proceeds of the borrowings we incurred in connection with the spin off to Sara Lee, and as a result, those proceeds are not available for our business needs, such as funding working capital or the expansion of our operations. In addition, the restrictions contained in our credit facilities restrict our ability to obtain additional capital in the future to:
We may need to incur additional debt or issue equity in order to fund working capital and capital expenditures or to make acquisitions and other investments. We cannot assure you that debt or equity financing will be available to us on acceptable terms or at all. If we are not able to obtain sufficient financing, we may be unable to maintain or expand our business. It may be more expensive for us to raise funds through the issuance of additional debt than it was while we were part of Sara Lee.
If we raise funds through the issuance of debt or equity, any debt securities or preferred stock issued will have rights, preferences and privileges senior to those of holders of our common stock in the event of a liquidation, and the terms of the debt securities may impose restrictions on our operations. If we raise funds through the issuance of equity, the issuance would dilute the ownership interest of our stockholders.