Ascena Retail Group Inc. ASNA,
parent of retail chains Ann Taylor and Loft, filed for Chapter 11 bankruptcy Thursday, with a restructuring deal backed by more than 68% of its guaranteed term lenders, crushed by the effects of the coronavirus pandemic on its already troublesome business. The Mahwah, NJ-based company said it hopes to reduce debt by about $ 1 billion in its pre-arranged restructuring, providing greater financial flexibility to be profitable. “The significant progress we have made in fueling sustainable growth, improving our operating margins and strengthening our financial base has been severely disrupted by the COVID-19 pandemic,” Acting Chief Executive Officer Carrie Teffner said in a statement. “As a result, we have taken a strategic step today to protect the business future for all of our shareholders.” Ann Taylor, Loft, Lane Bryant and other chains will continue to operate through the restructuring with approximately 95% of stores open. But the company will reduce its footprint by closing a significant number of Justice stores and certain Ann Taylor, LOFT, Lane Bryant and Lou & Gray stores. “This includes the exit of all stores of all brands in Canada, Puerto Rico and Mexico and the closure of all Catherines stores,” the statement said. Ascena has $ 150 million in funds from existing lenders and expects that sum combined with the cash flow generated by ongoing operations and the available cash to be sufficient to meet her needs. The shares, which are trading below one dollar, were up 3.8% before trading but have fallen 90% in the year to date, while the S&P 500 SPX,
It has gained 1.4%.
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