Outdoor apparel retailer Eddie Bauer yesterday announced plans to reorganize under Chapter 11 of the Bankruptcy code. The filing asks the court for permission to sell the company to private equity firm CCMP Capital Advisors and continue retail and catalog operations, including honoring its gift cards.
Eddie Bauer sells its gift cards and e-cards into the incentive and corporate markets channel, and is a member of the Incentive Gift Card Council.
Citing concerns about its ability to meet debt payments, the Seattle-based firm, established in 1920, asked the U.S. Bankruptcy Court in Delaware to allow the sale to an affiliate of CCMP for $202 million in cash. It is pursuing a related case in Canada.
According to a company statement, CCMP “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 honor gift cards and the company’s loyalty reward program.”
That said, the sale would almost certainly include an auction process allowing other potential bidders to emerge. But Edie Bauer Holdings said it “anticipates completing the sale process in 60 days or less.” The company plans to conduct business as usual through the process, including operations at its 371 retail stores, catalog operations and Web sites.
“Eddie Bauer is a good company with a great brand and a bad balance sheet, said Neil Fiske, president and CEO of Eddie Bauer, in a statement. “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.”
Fiske added that Eddie Bauer had been saddled with “a crushing debt burden” when it was spun off from former parent company Speigel in 2005 — following Speigel’s owm trip through Chapter 11 in 2003. “C 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.”