Men’s Wearhouse Owner Scores Fresh Funds After Bankruptcy Exit
(Bloomberg) -- Men’s Wearhouse owner Tailored Brands Inc. secured $75 million of new money from its existing shareholders and lenders three months after it emerged from bankruptcy protection.
The retailer arranged $50 million of convertible notes and $25 million in additional senior secured debt, according to a statement Friday. The company had “severely underperformed” compared to the projections in its Chapter 11 reorganization plan and needed roughly $75 million by the beginning of March to avoid a default, according to court papers.
The transaction provides Tailored Brands, which also carries labels like Jos. A. Bank and Moores Clothing for Men, with additional liquidity after it emerged from bankruptcy protection in December under new ownership. The company arranged a tentative deal with Silver Point Capital, its largest equity holder and a lender, to provide the funds and help it avoid another bankruptcy, Bloomberg reported last week.
“This additional financing further ensures we can continue to keep pace with our plans to come out of the pandemic stronger than ever” and serve customers, Chief Executive Officer Dinesh Lathi said in the statement.
Tailored Brands filed for bankruptcy last year after the pandemic dented demand for men’s suits and formal-wear. It eliminated about $700 million of debt in its exit from Chapter 11. Silver Point became its largest equity holder as part of the deal, and low-ranking creditors like landlords and vendors received a chunk of the company’s common stock.
Critics of the proposed financing cautioned that the transaction could hurt low ranking holders because part of the funds would be converted to equity, diluting the creditors’ stake. One creditor filed a letter to the company’s bankruptcy judge requesting an investigation into its conduct in the weeks following its exit from bankruptcy.
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