Japanese retailer Aeon has retired its majority shareholding in The Talbots, with the US chain announcing plans to merge with a special purpose acquisition company and repay $491m in debts to Aeon.

The Talbots said in a statement that a new financing solution included three related transactions.

Firstly, the retailer plans to merge with BPW Acquisition Corp, pursuant to which Talbots will acquire BPW in exchange for Talbots common stock.

Its move also sees the retirement of all equity currently held by Talbots majority stockholder, Aeon USA Inc, and the repayment of all of the company's existing debt to Aeon.

In addition, The Talbots announced a new $200m senior secured revolving credit facility from GE Capital. Proceeds of this new facility will be used to fund the transactions and for ongoing working capital needs, it said.

BPW is a special purpose acquisition company with approximately $350m in cash held in a trust account for the benefit of its shareholders, the statement added.

Under the merger plan, BPW would merge with and into, a subsidiary of Talbots. Talbots is to receive gross cash proceeds of up to $350m in the deal.

It would mean that pre-merger Talbots stockholders - other than Aeon - will own between approximately 30.9% and 39.6% of the Talbots common stock. Pre-merger BPW stockholders will own the remaining 60.4% and 69.1%.

Talbots entered into an agreement with whereby it will repay all $491m of existing indebtedness held by Aeon and the Japanese banks and retire Aeon's 29.9m shares for total cash consideration of $491m and one million warrants at the market strike price set at closing, the statement added.

"This is an exciting time for Talbots as these transactions will create a stronger company with a solid financial foundation and a sharp focus on its future goals and opportunities," said Trudy F Sullivan, Talbots president and chief executive officer.

"We are grateful to Aeon for their tremendous support over the years and their commitment to and belief in our strategic plan. We are pleased that we have developed a transaction that serves the best interests of our public shareholders and facilitates an orderly transition for our majority shareholder."