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Exclusive: J. Crew returns to debt restructuring lawyers – sources



(Reuters) – J. Crew Group Inc has lost restructuring lawyers for the second time in so many years to investigate the possibilities of reworking the debt as the US chain of clothing is struggling with falling sales and a shrinking money loss, people who are familiar with the case said Thursday.

FILE PHOTO: A J.Crew store is seen in Manhattan, New York on March 3, 2014. REUTERS / Mike Segar

The company's decision to once again seek help with its debt underscores the ongoing business challenges J. Crew be faced with . A shift to pricier garments turned off some customers, and the company faces competition from Amazon.com Inc and other ecommerce companies that have pushed a number of traditional retailers.

The preppy fashion retailer in recent weeks filed restructuring lawyers at Weil, Gotshal & Manges LLP, the law firm, which helped negotiate a previous debt training for the company and most recently managed department stores Sears Holdings Corp through bankruptcy proceedings, the sources said.

Weil lawyers with capital markets and mergers and acquisitions expertise are also involved in discussions with J. Crew, one of the sources mentioned.

J. Crew, who was taken privately in 2011 by TPG Capital and Leonard Green & Partners in an approx. The $ 3 billion leveraged buyout also interviews investment bank restructuring specialists, the sources say.

In a statement to Reuters on Thursday, the company did not directly consider whether it has approached restructuring lawyers, but said it has "evaluated and executed opportunities to strengthen J. Crew's balance" and its highest priority this year. is returning its flagship brand to profitability and maintaining speed for its fast-growing Madewell clothing industry.

A TPG spokesman refused to comment. Representatives of Leonard Green and Weil did not respond promptly to requests for comments.

A bankruptcy application is not currently on the horizon for J. Crew, which bears a debt burden of over 1.7 billion. USD, according to the sources who spoke on condition that they would not be identified because the discussions are confidential.

The New York-based dealer is in the early stages of exploring opportunities for its debt that could include refinancing, the sources say. The discussions are aimed at countering threatening debt settlement in 2021, one of the added sources.

The company has not yet approached creditors for a restructuring, although it could ultimately do so, one source said. J. Crew has previously considered picking up Madewell through a sale or public offering, Reuters reported.

J. The crew's maturity was about 66 cents on the dollar on Wednesday, according to financial institution refinitive, reflecting the investor's concerns about the retailer's economic health.

Retailer Operations Manager, Michael Nicholson, this month called financial results for the full year 2018 for the company's J. Crew brand "disappointing" and the new strategies were unsuccessful and damaged the financial performance of the chains. He added that the company's executives immediately took steps to improve profits.

In January, Millard "Mickey" S. Drexler, J. Crew's former CEO, stepped down as chairman and now acts as an adviser to the board.

J. The crew in 2017 reached an agreement with creditors, including the Blackstone Group LPs GSO Capital Partners and the Anchorage Capital Group, for a debt exchange that almost halved nearly $ 567 million. USD in bond commitments and extended their due date by two years.

Speaking in 2014 to sell J. Crew to Japan's Fast Retailing Co., owner of the Uniqlo clothing chain, fell apart.

J. The crew that sold clothes that were first drunk by former first lady Michelle Obama had about $ 25.7 million in cash from the beginning of February, down from about $ 107 million the year before, and the company has booked losses in seven. of the last eight quarters, according to securities archives.

Reporting by Mike Spector and Jessica DiNapoli in New York; Editing Matthew Lewis and Steve Orlofsky

Our Standards: Thomson Reuters Trust Principles.

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