AlixPartners is serving as restructuring advisor, PJT Partners is serving as financial advisor and Kirkland & Ellis is serving as legal advisor for Tailored Brands, which entered into a restructuring support agreement (RSA) with more than 75% of its senior lenders. The RSA outlines agreed-upon terms for a prearranged financial restructuring plan that is expected to reduce Tailored Brands’ funded debt by at least $630 million and provide increased financial flexibility.
To implement the terms of the RSA, Tailored Brands filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas. Throughout the restructuring process, Tailored Brands expects that its four retail brands, Men’s Wearhouse, Jos A. Bank, Moores Clothing for Men and K&G Fashion Superstore, will continue to function.
Tailored Brands also received commitments for $500 million in debtor-in-possession financing from its existing revolving credit facility lenders. Following court approval, this financing, combined with cash on hand (including approximately $90 million of restricted cash that the consenting term loan lenders agreed to unrestrict and make available to Tailored Brands subject to certain terms and conditions), and cash flow generated by Tailored Brands’ ongoing operations, is expected to be sufficient to meet the company’s operational and restructuring needs. The RSA further contemplates that the DIP financing will convert to a $400 million revolving credit facility from existing lenders upon Tailored Brands’ emergence from Chapter 11.
In addition to the financing relief, Tailored Brands filed customary motions with the court intended to allow the company to operate in the ordinary course, including paying employees as usual and continuing pre-existing employee health and welfare benefits, honoring customer gift cards, rental reservations and custom clothing orders, and maintaining existing loyalty programs.
“As evidenced by the positive results we saw in January and February, we have made significant progress in refining our assortments, strengthening our omnichannel offering and evolving our marketing channel and creative mix. However, the unprecedented impact of COVID-19 requires us to further adapt and evolve,” Dinesh Lathi, president and CEO of Tailored Brands, said. “Reaching an agreement with our lenders represents a critical milestone toward our goal of becoming a stronger company that has the financial and operational flexibility to compete and win in the rapidly evolving retail environment.”
Tailored Brands is an omnichannel specialty retailer of menswear, including suits, formalwear and business casual offerings.
