Eddie Bauer Holdings has initiated proceedings under Chapter 11 of the US Bankruptcy Code and has entered into an asset purchase agreement with an affiliate of CCMP Capital Advisors to
Eddie Bauer Holdings has initiated proceedings under Chapter 11 of the US Bankruptcy Code and has entered into an asset purchase agreement with an affiliate of CCMP Capital Advisors to buy the company’s assets through a bankruptcy process.
The purchase is subject to an auction and Bankruptcy Court approval, for USD202m in cash, with working capital and similar adjustments.
CCMP Capital, a global private equity firm with experience in the retail and consumer sectors, intends to operate the business as a going concern with little or no long-term debt.
CCMP Capital has agreed to keep the majority of the stores open and retain the majority of the employees; support company motions to maintain critical vendor relationships and payments; and support company motions to honour gift cards and the company’s loyalty reward programme.
The sale process is expected to enable a sale of the business to CCMP Capital or any higher and better bidder approved by the Court on an accelerated basis, thereby transforming the business into a financially stronger entity with substantially less debt and a better position for the future. The company currently anticipates completing the sale process in 60 days or less.
All of Eddie Bauer’s operations, including its 371 stores, catalogue operations and its online sites are open and serving customers. It plans to conduct business as usual through the process and has asked for court approval to continue paying product vendors and employees as usual. The company intends to honour customer gift cards, returns and loyalty programme points.
Neil Fiske, president and chief executive officer of Eddie Bauer, says: "Eddie Bauer is a good company with a great brand and a bad balance sheet. This process will allow the business to emerge with far less debt, positioned for growth as the economy recovers and as our new products gain traction. We expect this process to be completed very quickly, protecting our employees and critical vendor partners every step of the way.
"We have made good progress on our turnaround strategy of returning Eddie Bauer to its heritage as an active outdoor brand and have exciting new product launches on the way to market, including First Ascent, our return to expedition-grade outerwear and gear. Unfortunately, a crushing debt burden placed on the company from the Spiegel reorganisation in 2005, combined with the severe, prolonged recession, have left us with no choice but to use this process to reduce the debt load on the business."
