J. Crew Group Inc. filed for bankruptcy protection and reached a debt-for-equity swap agreement with lenders as the fashion retailer struggled amid the forced closure of its stores due to the coronavirus pandemic.
The fashion chain said it filed for Chapter 11 protection at the U.S. Bankruptcy Court for the Eastern District of Virginia. As part of the agreement, J. Crew’s lenders, which include Blackstone Group Inc. (BX), will convert about $1.65 billion of debt into equity.
"This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J.Crew and further enhancing Madewell's growth momentum," said Jan Singer, Chief Executive Officer at J.Crew. "Throughout this process we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come."
In addition, J. Crew secured commitments for a $400 million financing facility by the existing lenders, which include Anchorage Capital Group, L.L.C., GSO Capital Partners and Davidson Kempner Capital Management LP, among others.
The fashion chain operates 182 J.Crew retail stores, 140 Madewell stores, and 170 factory stores.Blackstone shares declined 2.8% to $49 in pre-market U.S. trading on Monday.
Wall Street analysts have Moderate Buy consensus rating on Blackstone’s stock based on 9 Holds and 4 Holds. The $54.91 average price target implies 8.9% upside potential in the shares in the next 12 months. (Blackstone stock analysis on TipRanks).
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