Clothing retailer Eddie Bauer filed for bankruptcy Wednesday and has agreed to be acquired by CCMP Capital Advisors for $202 million.
With the agreement in place, CCMP becomes the “stalking horse bidder” in the sale process. Other parties can try to outbid the firm and if CCMP is outbid, it is entitled to a break-up fee.
The firm plans to operate Eddie Bauer as a going concern, CCMP said in a statement, and keep the “majority” of the company’s 371 stores open and retain most of its employees.
Eddie Bauer has secured $90 million in bankruptcy financing from existing lenders Bank of America, GE Capital and CIT Group to operate through the Chapter 11 process. The company is looking to get a total of $100 million in bankruptcy financing.
The company negotiated an amendment with its senior term loan lenders that provided short-term relief on its covenants, but ultimately was not able to reach an agreement, resulting in the company seeking bankruptcy protection. Eddie Bauer has a long-term loan of $180 million, plus $75 million under convertible notes. The company also has a $150 million revolving line of credit.
Private equity firms have expressed interest in Eddie Bauer in the past. The company had agreed to be acquired by Golden Gate Capital and Sun Capital Partners in 2006 for $614 million, but Eddie Bauer shareholders shot down the deal at a special shareholders’ meeting in 2007. The deal would have included debt of about $328 million.
The company lost $44.5 million in the first quarter of 2009 while revenue fell to $179.8 million, compared to revenue of $213.2 million in the first quarter of 2008.
CCMP has a portfolio full of brand name consumer-products focused businesses, including 1-800-FLOWERS.COM, Guitar Center, Aramark, JetBlue, Quiznos, Vitamin Shoppe and Kinko’s.
CCMP spun out of JPMorgan in 2006 and is investing from its $3.4 billion debut fund. The firm was formerly known as JP Morgan Partners. Last summer, CCMP appointed famed turnaround pro Greg Brenneman as chairman and launched an office in Houston, Texas around the former Continental Airlines and Burger King executive.
Brenneman had run the firm’s portfolio company Quiznos before the appointment.
Earlier this year, Nancy-Anne DeParle, a managing director at the firm, stepped down to join the Obama administration as director of the White House Office of Health Reform. DeParle had focused on healthcare investments at CCMP.