Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection last Wednesday as part of a proposed sale to affiliates of CCMP Capital Advisors LLC. The deal is expected to be worth $202 million in cash with working capital and similar adjustments.
CCMP Capital said it intends to operate the business with little or no long-term debt and plans to keep a majority of the retailer's employees and operate a majority of its stores. It also said it would support the company's efforts to continue to pay suppliers and honor gift cards while it operates under bankruptcy court protection.
The filing in U.S. Bankruptcy Court in Delaware listed total assets of $476.1 million and total debts of $426.7 million as of May 30. The retailers largest unsecured creditor is the Bank of New York, which is owed $75 million.
Eddie Bauer has secured a commitment from its existing revolving credit lenders, Bank of America, N.A., GE Capital Corporation and CIT Group/Business Credit, Inc. for Debtor-in-Possession financing of $90 on an interim basis and $100 million based on final court order, which it believes will provide ample liquidity to meet its ongoing obligations during the sale process.
The company noted that in April 2009, it negotiated an amendment with its senior term loan lenders that provided short-term relief on its loan covenants. The company said it explored various paths for restructuring its balance sheet but was ultimately unable to reach an agreement.
Another buyer can still top the CCMP deal in a Delaware bankruptcy court, and CCMP now plays the role of the “stalking-horse” bidder, meaning it has agreed to buy the assets on particular terms for a particular price. If CCMP gets outbid, it would be entitled to a breakup fee and its expenses on the deal.
Eddie Bauer Inc. filed for bankruptcy in 2003 along with its former parent Spiegel Inc. Shareholders, which rejected a proposal to sell the brand to buyout firms Sun Capital Partners Inc. and Golden Gate Capital in 2007 for around $280 million.