- Angela Gonzalez-Rodriguez
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New York – J. Crew Group Inc is in talks with restructuring
advisors for the second time in the last six months, in an attempt to
wrangle falling sales and mounting debts.
The company’s decision to seek help with its debt once again
underscores the persistent business challenges J. Crew faces despite
recent turnaround and financial restructuring efforts, reports
Reuters, citing sources close to the matter.
The same sources said that the American retailer would have
enlisted restructuring attorneys at Weil, Gotshal & Manges LLP, the
law firm that helped negotiate a previous debt workout for the company
and most recently steered department store operator Sears through
bankruptcy proceedings. Additionally, Weil lawyers with capital
markets and mergers and acquisitions expertise are also thought to be
involved in the discussions.
Bankruptcy filing is not on the horizon for J.Crew
In a statement to Reuters on Thursday, the company did not directly
address whether it has approached restructuring lawyers, but said it
has “been evaluating and executing on opportunities to strengthen J.
Crew’s balance sheet” and that its top priority this year is to return
its flagship brand to profitability and sustain momentum for its
growing Madewell apparel business.
“The J.Crew brand delivered disappointing results in 2018 as many
new strategies we deployed were ultimately not successful and
negatively impacted our financial performance,” said Michael J.
Nicholson, president and CEO, in a statement issued earlier this
week.
J. Crew was taken private in 2011 by TPG Capital and Leonard Green
& Partners in a 3 billion dollars leveraged buyout. Eight years later,
the retailer carries a debt load exceeding 1.7 billion dollars,
according to sources quoted by CNBC News. A bankruptcy filing is not
currently on the horizon for J. Crew though, the latter said.
A TPG spokesman declined to comment while representatives for
Leonard Green and Weil have not yet responded to different media
requests for comment.
It´s worth recalling that a couple of years ago, in 2017, J. Crew
in 2017 reached a deal with creditors, including Blackstone’s GSO
Capital Partners and Anchorage Capital Group, on a debt exchange that
helped cut in half about 567 million dollars in bond obligations.
Additionally, the fashion group managed to extend their due date by
two years.
Image: J.Crew website
