True Religion expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the Bankruptcy Court. The RSA with lenders like TowerBrook Capital Partners will reduce the company's debt by over $350 million and convert it into the substantial majority of its reorganised equity.
"After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success," said John Ermatinger, president and CEO of True Religion. "By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organisational competencies.
"I want to recognise our lender community, our private equity owner, TowerBrook Capital Partners, and our financial and legal advisors for negotiating a constructive outcome for the company. Importantly, I want to thank our dedicated employees for remaining focused on the business, and our loyal customers and valued business partners for their support throughout this process," added Ermatinger.
He continued, "I am also proud to announce that year to date adjusted EBITDA through May at $7.1 million is up 95 per cent versus last year. This improved performance will allow us to enter into the next phase of our recapitalisation process with confidence as we continue to execute against our strategic plan and drive the business forward."
True Religion has secured post-petition debtor-in-possession (DIP) financing from Citizens Bank N.A. for up to $60m. Once True Religion’s plan is confirmed and it achieves the desired deleveraging of its balance sheet under the plan, True Religion will have sufficient 'exit' funding, also provided by Citizens Bank N.A., in addition to its ongoing cash flow, to finance operations post confirmation.
The plan provides for full payment of claims of True Religion’s continuing trade creditors, which includes continuing vendors, suppliers and landlords. True Religion has taken additional steps in order to ensure a smooth and orderly transition through the Chapter 11 filing. The company has filed a motion to honour and pay prepetition purchase orders that were issued prior to the petition date, but which have not yet come due. True Religion has also filed a separate motion to pay certain vendor claims that arose prior to the Petition Date, as well as to pay for goods received within 20 days of the bankruptcy filing.
The company’s legal advisors include Wachtell Lipton Rosen & Katz and Pachulski Stang Ziehl & Jones. The company’s financial advisor is MAEVA Group, LLC. (KD)
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