The Bellevue, Washington based clothing store chain has filed for Chapter 11 bankruptcy protection in Delaware, and, at the same time, has struck a deal to be acquired by private-equity firm CCMP Capital Advisors LLC.
Put together, Eddie Bauer has over 8,600 employees in Canada and the United States. The company has also sought assistance under Canada's bankruptcy laws.
Quick sale
The company is seeking a court approval for the quick disposal of its assets to CCMP. However, any other buyer could stall the sale and top the CCMP offer of $202 million in the proposed auction.
CCMP would act as the "stalking horse" bidder in the auction and would set the ball rolling for other possible offers to pour in.
“A failure to consummate the sale on an expedited basis could compromise the sale and bid process,” company Chief Financial Officer Marvin Edward Toland said in court papers.
Eddie Bauer’s financial position
Eddie Bauer had assets of $476 million and debts of $427 million as of May 30, according to the court filings.
The Bank of New York is stated to be Eddie’s biggest unsecured creditor, holding notes worth $75 million.
The company’s balance sheet has been in the red for the last three years now. Even in the first quarter of this year, it has reported a loss of $44.5 million on revenue of close to $180 million.
Words from the buyer
CCMP’s managing director Jonathan Lynch described Eddie Bauer as a legendary brand. He stated that, as on date, it had become an epitome of "good company, bad balance sheet".
Lynch expressed his intentions to run the business as a going concern with little or no long-term debt.
He said, "What you need to do is fix the balance sheet in a way that allows this company to reach its full potential."
CCPM already has a number of retail sector holdings in its repertoire, including Quiznos Sub and AMC Entertainment.
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