JPMorgan,GE Capital andCredit Suisse First Boston are leading a $300 million exit financing for clothing chain, Eddie Bauer. Syndication of the deal was launched last Tuesday. The six-year term loan is expected to be priced in the range of LIBOR plus 2 1/2%. The company will also receive a Bank of America-led $150 million revolver that did not go to general syndication. The revolver was originally a debtor-in-possession financing that is being rolled over. Pricing and maturity could not be determined.
Last Monday, Eddie Bauer Holdings, the new parent company for Eddie Bauer, was established and a board of directors was announced following approval of a reorganization plan by the US Bankruptcy Court for the Southern District of New York. Spiegel was the former parent company. The new board and holding company will become effective when Eddie Bauer emerges from Chapter 11, expected in mid-June. It will operate as a completely independent business, separate of Spiegel.
Jim Brewster, Spiegel senior v.p. and cfo said the judge at the proceedings called this, "The perfect poster child of what Chapter 11 is supposed to look like." Brewster said that JPM and CSFB were both participants in past Spiegel facilities and that GE is involved in the revolver. "We were confident they would get it done," he said of the banks. "They had the best pricing and thought they would get this wrapped up quickly."
Based on the value the company used Brewster said the initial recovery is 91%. He anticipates that Eddie Bauer will go public again shortly and expects to register and get trading on NASDAQ soon.
The Redmond, Wash.-based company entered into voluntary bankruptcy in February 2003. In April 2004 Spiegel hired what was then Miller Buckfire Lewis Ying & Co. to look into companies that might be interested in acquiring the Eddie Bauer business. Spiegel received six offers but the creditors committee thought they were toward the lower end of valuation and considered taking it to auction, but Brewster said they were worried they still would not get the right price.