J. Crew is entering into a deal that it expects will put it one step closer to improving its business.
The fashion retailer has won the support of more than 50% of its term loan holders to trim its $2 billion debt load and end intellectual property litigation. This was according to sources familiar with the situation, according to Reuters.
J. Crew had launched a debt restructuring deal targeting its term loan and unsecured bonds earlier this week to help it avoid bankruptcy. Defined as a debt swap, the deal was extending the deadline for debt payments.
Specifically, the plan was offering to exchange its $566.6 million of outstanding pay-in-kind notes due 2019. At least 95% of bondholders must accept for the proposal to proceed.
The plan already had support from major creditors. These include GSO Capital Partners LP, the credit arm of buyout fund Blackstone Group LP, and hedge fund Anchorage Capital Group LLC, Reuters reported.
J. Crew earned this support despite dismal first quarter earnings, which revealed its 11th consecutive quarter of same-store sales declines. Total sales fell 6.3% to $532 million in the quarter, ended April 29. Total same-store sales fell 9%.
Meanwhile, last week CEO and chairman Mickey Drexler announced he would be stepping down as chief executive after 14 years in the role. Drexler, who will remain as chairman, will be succeeded by West Elm CEO Jim Brett. Earlier in the year, the retailer announced that its longtime creative director and muse, Jenna Lyons, was leaving.
Despite the company’s challenges, Drexler expressed optimism about the chain's efforts to improve its business. “We have a clear vision and action plan in place to meet our customers' needs - wherever and however they choose to shop," he said. "I look forward to transitioning my role to chairman and to working with our new CEO, Jim Brett, as he takes the reins in July and continues to position J.Crew for long term success."