The retailer said Thursday that the agreement-in-principle will reduce the company’s debt by more than $400 million. It also said the reduction will allow it enough financial flexibility to support the company’s long-term growth prospects.
Following finalization of the documentation and the execution of the agreement, David’s Bridal will file a voluntary Chapter 11 petition for bankruptcy court protection and continue operations through the court-supervised process. The retailer also said it has commitments from term loan lenders covering for $40 million for a debtor-in-possession facility.
Scott Key, chief executive officer, said, “For 60 years, David’s has delivered for our customers on time, and the agreement announced today allows us to maintain that tradition for many years to come.”
Key noted that the financial restructuring plan, negotiated through extensive discussions, “provides an expedited path to significantly reduced debt and enhanced financial flexibility.”
David’s Bridal has been on the watch list of several credit ratings agencies for over a year. The company, based in Conshohocken, Penn., missed a debt payment in October.
David’s Bridal said customers can continue to shop at more than 300 company stores and online “without disruption.” It also emphasized, “Orders will arrive on time and bridal appointments will not be impacted.”
Key made a short one-minute clip to tell customers operations would continue as usual. That should at least prevent a panic that occurred in July 2017 when David’s Bridal much smaller competitor Alfred Angelo shuttered its 10 stores without warning and filed to liquidate through a Chapter 7 process. That closure left many brides-to-be in the dark about whether they would get their gowns. The company also let go of its seamstresses, which meant that if consumers were able to pick up their gowns, they would need someone else to do alterations. At the time, David’s Bridal offered to help, giving 20 percent off bridesmaid and flower-girl dresses, and a 30 percent discount on wedding gowns with an Alfred Angelo receipt.