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Loehmann's emerges from Chapter 11 Protection
04
Mar '11
Loehmann's Holdings Inc and its affiliates announced that it has successfully completed its restructuring and has emerged from Chapter 11 bankruptcy proceedings. The Company secured $45 million in exit financing from Wells Fargo Bank, N.A. and Whippoorwill Associates, Inc., as agent for its discretionary funds and accounts.

The Company's Joint Plan of Reorganization was confirmed on February 8th and becomes effective on March 1st. As part of the Plan, the Company received a $25 million capital infusion through a rights offering to its Class A Noteholders that was backstopped by Istithmar World and Whippoorwill Associates, Inc. The restructuring eliminates all $110 million of the Company's long-term bond debt, $14 million in related annual interest, $23 million in other cost reductions, and recapitalizes the balance sheet through the exchange of notes for common stock.

The Company also announced that Loehmann's CEO Jerald Politzer, who guided the company through this successful bankruptcy process, has chosen to leave the Company. Joe Melvin, the Company's COO and CFO will assume the role of interim CEO.

"As was our goal, we have significantly reduced our debt through the Chapter 11 process and have emerged a stronger, more financially secure company better positioned to address the opportunities and challenges of the marketplace," said Joe Melvin, interim CEO of Loehmann's. "We look forward to rededicating ourselves to building Loehmann's into an even more exciting shopping destination for our existing customers and tapping into a whole new customer base who appreciates the value and brands we bring to them."

Commenting on the exit financing, Jim Dore, Group Head and Executive Vice President, Wells Fargo Capital Finance – Retail Finance Division, said, "We appreciate the opportunity to provide Loehmann's with a flexible financing solution and look forward to building our new partnership."

Moving forward, the Company will focus merchandising efforts on well-known designer brands that resonate with its frequent shoppers. The Company will also refine its advertising outreach to communicate with Loehmann's core customers and potential new shoppers. Emphasis will also be placed on further building on Loehmann's successful membership program which currently has a database of over 1.5 million Insider Members.

In addition, as part of the restructuring, Arthur E. Reiner and Nancy Ross have been appointed as independent members of the Board of Directors. They will join directors Dr. Shuja Ali and Kapil Zaveri of Istithmar World, and Steven Gendal and Michael Lee of Whippoorwill Associates, Inc. Mr. Reiner will be the Chairman of the Board.

Mr. Reiner was Chairman and Chief Executive Officer of Macy's East. He was also Chairman and Chief Executive of Finlay Enterprises, a nation-wide fine jewelry company. In May 2003, Mr. Reiner became a director of New York & Company, Inc. and is currently Chairman of the Compensation Committee, and a member of the Corporate Nomination & Governance and Audit Committees.


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