Wet Seal defaults on $29 million

Foothill Ranch, Calif. – Teen retailer Wet Seal Inc. has defaulted on a total of $28.8 million in senior convertible notes and related costs. In a regulatory filing, the struggling retailer said it received notice of default on $27 million in notes from creditor Hudson Bay Master Fund Ltd., plus costs including attorneys’ fees and disbursements.



Wet Seal has reached a two-week forbearance agreement with the fund, giving it until Jan. 12 to pay off the debt.



The retailer is in significant financial trouble, as it recently posted a loss of $35.9 million in the quarter ended Nov.1, up from a loss of $12.5 million the previous fiscal year. Wet Seal, which previously reported it has engaged outside advisors to seek strategic alternatives, indicated it may consider filing for bankruptcy to recapitalize or restructure its debt and obligations.



In addition, the company plans to close 60 stores in the fourth quarter of fiscal 2014 as the lease term expires. Wet Seal has hired outside advisors, including Houlihan Lokey and FTI Consulting, to assist it in analyzing potential alternatives.