Children’s Place boosts liquidity with additional funding from Saudi investing firm
The Children’s Place Inc. has received a second loan from its majority shareholder, Mithaq Capital SPC.
In its newest move to boost liquidity, the struggling children’s apparel retailer said it has entered into a new financing agreement with Mithaq for an unsecured $90 million term loan, to be funded no later than April 19. The new loan “will further strengthen the company’s liquidity position on better terms in the aggregate” than the previously announced term loan from 1903P Loan Agent, LLC. As a result of the new financing, Children's Place said it will not pursue that loan any further.
In February, Children’s Place that it had received notice from Mithaq and another Saudi investing firm, Snowball Compounding Ltd., that they had built a 54% stake in the company and plan to nominate 11 persons for election to its board at the 2024 annual shareholders meetings. The news came less than a week after the retailer issued a profit warning for its fourth quarter and said it would consider strategic alternatives if it could not secure funds to support ongoing operations.
Since February, Children’s Place has received $168.6 million in funding from Mithaq, composed of the new $90 million term load and the previously announced $78.6 million in interest-free, unsecured and subordinated term loan funding.
“We are pleased to have the continued support of our majority shareholder, and to have secured additional funding to address our liquidity needs on significantly more favorable terms in the aggregate than those contemplated by the proposed term loan,” said Children’s Place COO and CFO Sheamus Toal. “We are now better positioned to deliver on our industry-leading digital strategy, while also remaining strongly focused on improving operational efficiency and profitability.”
Proceeds of the new loan will be used to repay and existing $50 million loan, to reduce account payable balances with vendors, and for other general corporate purposes, the company said.
The Children’s Place's global retail and wholesale network includes more than 500 stores in North America, four e-commerce sites, wholesale marketplaces and distribution in 16 countries through six international franchise partners.
The company designs, contracts to manufacture, and sells apparel, accessories and footwear predominantly at value prices, primarily under its proprietary brands: The Children’s Place, Gymboree, Sugar & Jade and PJ Place.