The retailer, which has $1.5 billion in long-term debt, already received the OK to tweak its term loan. Now it’s looking to button up an exchange of its payment-in-kind bonds, pushing back its next big debt maturity to 2021 from 2019 and giving Brett the breathing room he’ll need to remake operations.
Investors holding roughly 93.6 percent of the outstanding PIK bonds already agreed to the exchange and J. Crew had a deadline of 11:59 p.m. Monday to get that percentage to 95 percent for the deal to go through.
Not everyone’s happy, though, and some lenders are challenging the steps J. Crew has taken to right its finances.
Eaton Vance Management and Highland Capital Management sued the company in New York Supreme Court, arguing that moving most of the J. Crew intellectual property to a separate corporate entity to facilitate the restructuring violated the retailer’s term loan. However, a judge rejected the investors’ request to halt the exchange offer.
There was no word on how Brett spent his first day, but there seems to be plenty of work. (Millard “Mickey” Drexler is staying on as chairman).
Already, J. Crew is a company in flux. The retailer plans to shutter at least 20 stores this year and is cutting 150 workers from its headquarters staff and not filling 100 open jobs.
In the first quarter, impairment charges and severance extended losses to $123.3 million, while adjusted earnings before interest, taxes, depreciation and amortization contracted to $26.6 million from $45.4 million. Total revenues fell 6 percent to $532 million.
For his trouble, Brett during his first year will receive a base salary of $1.3 million, an annual bonus of at least 150 percent of that salary, a signing bonus of $1.3 million and a potential performance bonus of $4 million.
The first half of the performance bonus is tied to adjusted annual EBITDA, with a target of at least $250 million.
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