rue21, a specialty retailer focusing on the teen market, filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Western District of Pennsylvania. The company has been approved for up to $125 million DIP financing from its existing ABL lenders and up to $50 million in new money term loan DIP financing from a subset of its existing term loan lenders.
According to the court documents, Bank of America is administrative agent for the ABL lenders and Wilmington Savings Fund Society is serving as successor to JPMorgan Chase Bank as administrative and collateral agent for the term loan.
“This financing is intended to provide the company with the liquidity necessary to support its ongoing business operations during the financial restructuring process,” said Melanie Cox, rue21 CEO. “These actions are being undertaken with the goal of strengthening the company’s balance sheet, achieving a more efficient cost structure and concentrating resources on a tighter retail footprint in order to pave the best path forward for rue21. Even in a challenging environment, we are fortunate that rue21 has highly relevant brands, an enthusiastic and loyal customer base, and hundreds of highly performing stores.”
Last month, rue21 began the process of closing approximately 400 underperforming stores in its 1,179 store fleet, and the company may evaluate additional store closings as it continues to manage its real estate lease portfolio. In conjunction with the Chapter 11 restructuring, rue21 has entered into a restructuring support agreement with lenders holding 96.8% of the company’s secured term loan, bondholders representing 60.2% of the company’s issued and outstanding unsecured notes, and the company’s majority shareholder.
rue21 has retained Kirkland & Ellis as its legal advisor, Rothschild as its investment banker and financial advisor and Berkeley Research Group as its restructuring advisor.