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Eddie Bauer Retains Investment Banks to Explore Strategic Options, Sources

June 27, 2017, 07:46 AM
Filed Under: Retail

Distress in the retail sector is weighing heavily on Eddie Bauer, according to sources who say the storied clothier has engaged Guggenheim Partners LLC and Financo LLC to explore avenues for debt relief. The sources, who spoke to Reuters on condition of anonymity, say that the company may be fishing for a buyout firm to help alleviate the pressure of $425 million in debt coming due in 2019 and 2020.

The nearly 100 year old clothing chain filed for bankruptcy in 2009, after nearly three years in the red, and narrowly avoided liquidation thanks to a $286 million bid from San Francisco investment firm Golden Gate Capital. The firm beat out liquidation firms including Great American Group, Hilco Consumer Capital and Gordon Bros. Group and promised to keep Eddie Bauer's more than 300 retail outlets open.

According to Reuters, Moody's and Standard & Poor's have both issued downgrades of Eddie Bauer's debt recently, “warning that the brand may have to rely on borrowings to fund working capital needs and interest expense.”

As ABL Advisor recently reported, 2017 is shaping up to be one of the worst on record for the retail industry. As many as 40% of retail bankruptcies are expected to end in liquidation, according to Analysts say the impact on the American consumer sector could be transformative, with 20% and 25% of the nation’s shopping malls will close in the next five years, according to a report out this month from Credit Suisse.

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