BCBG Max Azria Group is in transition mode.

This story first appeared in the April 30, 2014 issue of WWD. Subscribe Today.

The company has been trying to restructure its $685 million in debt for nearly a year. Guggenheim Partners holds about $475 million of the debt, with $230 million on a first-lien term loan and $245 million on a second-lien term loan. The balance was drawn down from a revolving credit facility. Talks last year included a refinancing that would convert the debt into equity, and that would have Guggenheim taking control of the company.

Those discussions have continued into 2014, with a resolution expected shortly. Sources said that discussions include Max Azria becoming a minority shareholder and taking on a narrower role, such as heading up design. That would also mean hiring an executive to oversee day-to-day business operations, as well as hiring others to deepen the management bench.

BCBG and Guggenheim both declined comment on any specifics related to the finances or debt restructuring.

The company declined to reveal its annual volume. Sources pegged it at around $950 million in 2010, but sources said revenues are currently below that.

The company’s brands remain highly regarded in the industry, but there’s now increased competition in the contemporary market, and more fashion-forward brands emerging in the fast-fashion sector, where prices are lower.

BCBG Max Azria has battled against financial pressures on and off in recent years. In 2001, market sources said that the company had some financial constraints from its attempt to exit unprofitable leases that were the result of an aggressive expansion plan. To Azria’s credit, in 2004 and in 2011, he found ways to resolve the firm’s financial pressures.

Ten years ago, in December 2004, the company orchestrated a $53 million bond offering via a private placement. The investment-grade bonds were backed by the securitization of BCBG’s trademarks. At the same time, BCBG entered into a new $100 million working capital credit facility.

The bond offering also helped the company pay down its debt to its longtime lender, GMAC Commercial Finance.

Shortly after the 2004 deal closed, plans at BCBG included further retail expansion and consideration of a men’s line. In an interview with Azria at the time, he was already visiting Madrid and London to explore potential footholds for European expansion of the company’s brands.

In 2006, BCBG acquired the Max Rave chain, which it liquidated in 2011. Also that year, it inked a deal to sell a ready-to-wear line called Tex by Max Azria at Carrefour in France, Spain, Italy, Belgium, Portugal and Greece. That program was ended in 2009.

In May 2011, BCBG refinanced its debt again with a $230 million term loan from Guggenheim. Now the company is said to be looking for further ways to restructure its debt.

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