Golden Gate Capital threw Coldwater Creek Inc. a $65 million lifeline — and could take a big stake in the struggling fashion company.
The private equity firm gave Coldwater a five-year, $65 million senior secured term loan. In addition to the interest and fees payable on that loan, Golden Gate received convertible preferred stock, giving it the right to purchase up to 16.7 percent of Coldwater’s common stock, on a fully diluted basis, for 85 cents a share.
Coldwater shares gained 12.4 percent Monday to 52 cents a share.
Golden Gate, which has invested in a host of retailers, including Eddie Bauer, J. Jill, Zale Corp. and Express, will also control two seats on the firm’s board.
Dennis Pence, chairman and chief executive officer of Coldwater, said the investment would give the company “further financial flexibility to complete our near-term business objectives and accelerate our growth plans.”
Josh Olshansky, managing director of Golden Gate, said, “Coldwater Creek is a strong brand that has undergone significant changes over the past year to reposition its core offering and now, with a solid foundation in place, is realizing the benefits of these changes.”
Last year, Coldwater posted net losses of $99.7 million on revenues of $773 million. The retailer ended the year with 363 stores.