Private credit firm Golden Gate Capital now owns Pacific Sunwear after the surf apparel retailer left bankruptcy protection this week, just days after it won confirmation of its restructuring proposal
The clothing retailer exited Chapter 11 bankruptcy after handing all the equity in the reorganised company to the San Francisco-based investment shop, the firms announced Wednesday (7 September). In turn for receiving fresh shares in a renewed PacSun, Golden Gate wiped out a portion of the retailer’s term loan debt, said to be $88.01 million in the reorganisation plan. The northern California financial firm initially extended a $60 million term loan in December 2011, which carried a 5.5 percent interest rate.
Wilmington, Delaware, bankruptcy judge Laurie Silverstein gave the final sign-off on the restructuring proposal Tuesday with the company emerging from bankruptcy protection one day later. In the announcement, Golden Gate said it would provide a minimum of $20 million investment to help the company grow, while Wells Fargo will also provide a five-year $100 million revolving line of credit.
“Now, with a strengthened balance sheet, reduced long-term debt and reduced annual occupancy costs, the Company is well-positioned to build a stronger future and achieve long-term success,” Josh Olshansky, a Golden Gate managing director, said in the statement.
Pacific Sunwear, founded in 1982, filed a Chapter 11 on April 7 amid industry weaknesses; several other teen retailers, including surf apparel company Quiksilver, have filed for bankruptcy in the last several years. President and chief executive officer Gary Schoenfeld said the company made several critical moves that also hurt the company, which included stopping the sale of shoes and investing in two offshoot brands, d.e.m.o. and One Thousand Steps, which were discontinued in 2008.