Restructured Pacsun emerges from bankruptcy
PacSun has closed around 20 stores as part of the restructuring process
Five months after filing for Chapter 11 bankruptcy protection, teen sports and lifestyle retailer Pacific Sunwear of California has been acquired by San Francisco private equity firm Golden Gate Capital.
The new owner is providing at least $20m in capital to the struggling brand, which operates 583 stores nationwide and in Puerto Rico.
The restructuring plan, which was set out when the retailer filed for Chapter 11 back in April, has also seen Golden Gate Capital convert more than 65% of its term loan debt into the equity of the reorganised company, while Wells Fargo has also provided a five-year $100m revolving credit line.
"We are excited to be emerging from a quick and efficient Chapter 11 process as a stronger and more competitive company," said PacSun president and CEO Gary Schoenfeld.
"For more than 20 years, PacSun has been the largest retail partner for many of our industry's most dynamic emerging brands, and we are very pleased to have had Golden Gate Capital's full support in ensuring that all branded partners – both large and small – are to be paid in full as part of our Plan."
The retailer continued to trade during the Chapter 11 restructuring process, which allowed it to reduce its $90m of long-term debt by 65% and reduce the cost of operating its stores through landlord negotiations or lease rejections.
Like competitors such as American Apparel, Quiksilver and Wet Seal – all of which have filed for bankruptcy protection in the past year – Pac Sun has struggled against a sluggish retail environment and increasing competition from fast fashion and online rivals. In its last full year, the company booked a net loss of $8.5m, while sales dropped 3.1% to $800.9m.
"With a strengthened balance sheet, reduced long-term debt and reduced annual occupancy costs, the company is well-positioned to build a stronger future and achieve long-term success," said Josh Olshansky, managing director at Golden Gate Capital.
Pacific Sunwear will operate as a wholly-owned private portfolio company of Golden Gate Capital, whose retail investments also include Eddie Bauer, Express and Payless Shoes.
Earlier this week it was also reported that a consortium of retail operators has successfully bid for bankrupt US teen apparel retailer Aeropostale in a deal valued at around US$243.3m.
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Teen sports and lifestyle retailer Pacific Sunwear of California has appointed former Genesco finance chief, James Gulmi, as interim-CEO....
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