Casual Male Corp.'s $135 million in debtor-in-possession financing throughFleet Retail Finance will pay off more than $97.9 million it owes under a pre-petition loan agreement with several lenders as well as roughly $3 million it owes under another pre-petition loan with Fleet. Michael O'Hara, the company's first senior v.p. and general counsel, said that the Canton, Mass.-based retailer has filed for Chapter 11 bankruptcy and the loan will fund the business as it emerges over the next year, rather than see an enforced sale of assets. Until February, Casual Male was known as J. Baker Inc.
The credit is structured as $100 million revolving credit, a $20 million term loan "A" and a $15 million term loan "B" with Back Bay Capital, a subsidiary of Fleet. Pricing is LIBOR plus 21/4 % on the revolver, rising incrementally. The bank group has long-standing relationships with the company, noted O'Hara, explaining the choice of Fleet and its subsidiaries.
Unable to compete effectively in the sector, the company has been selling its shoe businesses-- often at fire-sale prices--and debt piled up on its balance sheet. The company had larger than expected losses on the sale of the last shoe business, said O'Hara. "Recent shortfalls in sales, influenced by the lack of a summer and spring in Boston, and economic conditions, which have seen layoffs, have hurt the company's performance further," O'Hara added. According to O'Hara, bankruptcy will enable Casual Male to put its shoe debts behind it and move on to a solid footing in big-and-tall men's clothing.