Pacific Sunwear Facing Bankruptcy

by San Antonio Attorney

Pacific Sunwear, also known as PacSun, is expected to file for bankruptcy by the last week of April.

The California-based company’s plan to file for bankruptcy protection was announced following its consultations with restructuring firm FTI and investment banking firm Guggenheim Securities, to borrow $160 million that will mature by the end of this year.

The retailer has a few options left and one of these is to file a Chapter 11 bankruptcy scheduled in April.  No final decision was made and the company is still in negotiations with the creditors and advisers.

The debt of the company consists of $100 million worth of revolving loans with Wells Fargo Bank and another loan that costs $60 million, which was backed by a private equity firm named Golden Capital.  Both of these debts were scheduled to mature in December.

After Pacific Sunwear’s loans will mature, the company is expected to pay $27 million as a paid-in-kind payment of the interest.  The stocks of Pacific Sunwear traded at cost of 10 cents on Tuesday.

Based in Anaheim, California, the company garnered an income of $826.8 million worth of sales last 2014.  The company has released their statistics for the fourth quarter of 2015 and the full year results.

Pacific Sunwear has $11 million worth of coffers by the end of third quarter and hve another $35 million in debt under the bank revolver.

Pacific Sunwear is the most recent company to join the roster of retailers filing for Chapter 11 protection.  Pacific Sunwear sales were affected as the teens, their target customers, tend to prioritize gadgets and athletic wear.  Aeropostale, Pacific Sunwear’s competitor, has sought help from an advisory firm to have alternatives in alleviating financial constraints.   Auction and restructuring plans were considered.

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