West Marine files for bankruptcy; to ‘rationalize’ footprint
The nation’s largest retailer of boating and marine supplies has filed for Chapter 11 bankruptcy protection as its looks to restructure its debt and lease obligations.
West Marine said it has entered into a restructuring support agreement with the support of its key financial stakeholders — including 96.2% of its term loan lenders, 100% of its FILO lenders and 93.9% of its equity holders — to pursue a comprehensive restructuring transaction that will allow it to “deliver its capital structure while maximizing value and ensuring continued service to the boating community.”
In late April, Bloomberg Law reported that West Marine held talks with its owners Oaktree Capital Management and L Catterton about how to overhaul its debt in conjunction with a business shift aimed at addressing its leases.
In announcing the filing, West Marine noted that, like many in the boating community, it has faced headwinds in recent years, including supply chain disruptions, extreme weather events and shifts in consumer behavior.
“Today’s action addresses these challenges by strengthening the balance sheet, reducing debt levels, and improving financial flexibility,” the company said,
West Marine, which operates more than 200 stores across 34 states and Puerto Rico, remains open for business, both in-store and online, and is fulfilling orders and honoring warranties and returns.
“The actions we are taking today will allow us to optimize our operations and rationalize our footprint, so that we can focus on continuing to serve our customers and community well into the future,” said Paulee Day, CEO. “I want to thank our dedicated crew members, our loyal customers and partners, and our financial partners for their continued support.”
To fund operations throughout the Chapter 11 process, West Marine reached an agreement with its secured lenders to consensually use its cash collateral, providing it with sufficient liquidity to meet its obligations to customers, employees and vendors. They have also committed to providing the company with new financing in support of its exit from Chapter 11.
West Marine filed customary first day motions with the Bankruptcy Court seeking authority to continue operations without disruption, including continuing to pay employee wages and benefits and to maintain its customer programs. .
West Marine is being advised by Kirkland & Ellis, LLP and Young Conaway Stargatt & Taylor, LLP as co-counsel, Portage Point Partners as investment banker, FTI Consulting as restructuring and communications advisor, and Hilco Global as real estate advisor.
