rue21, 'en route' to bankruptcy after missing payments
loading...
In January, the company was reportedly to have hired Rothschild Inc. to help manage its nearly 1 billion dollars debt-load, according to people with knowledge of the matter quoted by Bloomberg. Since then, rue21’s bonds have continued to descend to rather deep distressed levels.
Still in January, the retailer’s 250 million dollars of 9 percent senior unsecured notes maturing 2021 dropped another 1.3 cents after the news of Rothschild’s hiring, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. This dip seems even sharper when compared to the 87 cents the bond traded in early 2015.
Making things worse, the company’s ratings were cut last month by S&P Global and Moody’s Investors Service. Rue21, which was taken private by Apax in 2013 for about $934 million, has seen same-store sales under pressure and adjusted earnings before interest, taxes, depreciation and amortisation fell 56 percent in the third quarter, according to Moody’s.
Now, ‘Debtwire’ informs that J.P. Morgan is ceding its role as administrative agent for rue21’s term loan to Wilmington Savings Fund Society as the struggling apparel retailer seeks to restructure its debt.
The main reason why is that the apparel retailer has missed interest and amortisation payments and is seeking new lenders, although many lenders think the company can’t take on any more debt, ‘Debtwire’ Associate Editor Reshmi Basu further clarified in comments to ‘Retail Dive’.
Explaining the current situation to FashionUnited, a spokesperson for the company said that “rue21 has been working to improve its operations and enhance its liquidity position and has been actively engaged with its lenders and bondholders to explore the best path forward. The company currently has in place with its lenders forbearance agreements that run through late April.”
Image:rue21.com