J.Crew clinched lenders’ consent to amend loan
J. Crew just bought itself some more time with its lenders.
Lenders holding approximately 88% of the outstanding principal amount of loans under J. Crew’s term loan agreement have approved a term amendment. The amendment, initially proposed in mid-June, was offering to exchange its $566.6 million of outstanding pay-in-kind notes due 2019. The notes were issued by Chinos Intermediate Holdings, an indirect parent to J.Crew.
“These transactions are strategically important to the overall effort in po-sitioning the company for long-term success,” the company said. “Ad-dressing the nearest-term maturity removes an overhang in a challenging market environment and provides the company a clear and more confi-dent path to execute its business plan.”
The decision comes on the heels of winning the support of more than 50% of its term loan holders to trim its $2 billion debt load and end intellectual property litigation. If J.Crew’s lenders failed to consent to the plan, the retailer would have found itself on the fast-track toward a potential bankruptcy, according to CNBC.
J.Crew continues to fight in hopes of turning its business around, despite the obstacles in its way. The company posted dismal first quarter earnings, which revealed its 11th consecutive quarter of same-store sales declines. Total sales fell 6.3% to $532 million in the quarter, ended April 29. Total same-store sales fell 9%.
In the wake of these declines, CEO and chairman Mickey Drexler announced he would be stepping down as chief executive after 14 years in the role. Drexler, who will remain as chairman, will be succeeded by West Elm CEO Jim Brett. Earlier in the year, the retailer announced that its longtime creative director and muse, Jenna Lyons, was leaving.
Despite the company’s challenges, Drexler expressed optimism about the chain's efforts to improve its business. “We have a clear vision and action plan in place to meet our customers' needs -- wherever and however they choose to shop," he said.