Eddie Bauer Holdings, Inc. announced that it has made a voluntary prepayment of $20 million on the existing term loan facility. The company is currently in compliance with all financial covenants under the Term Loan, even without giving effect to the voluntary prepayment.

Marv Toland, CFO, commented, “We expect to be in compliance with our financial covenants through the fourth quarter of 2007, even without this prepayment. We believe that the voluntary prepayment from cash on hand provides us with additional operating flexibility to manage the business while remaining in compliance with loan covenants.”

About Eddie Bauer

Established in 1920 in Seattle, Eddie Bauer is a specialty retailer that sells casual sportswear and accessories for the modern outdoor lifestyle. Eddie Bauer believes the Eddie Bauer brand is a nationally recognized brand that stands for high quality, innovation, style and customer service. Eddie Bauer products are available at approximately 390 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebauer.com and http://www.eddiebaueroutlet.com. Eddie Bauer also participates in joint venture partnerships in Japan and Germany and has licensing agreements across a variety of product categories.