Charlotte Russe dodges bankruptcy with debt restructure agreement

By

Cassidy Mantor

Published
Dec 15, 2017

Charlotte Russe has been bailed out of a potential bankruptcy filing thanks to a debt restructuring agreement that will reduce loan interest rates and drop the company's debt from $214M to $90M.

The San Francisco-based juniors brand's $240 million debt was due to mature in 2019, by which point the company was still not going to be able to pay. Key components of the debt restructure agreement include reducing the principal of the debt down to $90 million, cutting interest in half, and extending the loan's maturity date three years to 2022.

Jenny Ming, CEO of Charlotte Russe, said the term loan agreement will help the company repay its long-term debt and improve its financial flexibility. She stated that this will reinvigorate the brand and position it for success in the future.

Ming continued, "The willingness of our lenders to equitize a substantial portion of the Term Loan debt underscores their confidence in the Charlotte Russe team and their commitment to our strategic plan for profitability and future growth."

In exchange for the debt relief, the lenders will receive 100% equity in Charlotte Russe. The brand also has to meet a number of conditions stipulated by the agreement, which include taking steps to improve operational efficiency. One step specified in the agreement is that the company must seek rent relief to help reduce expenses.

The agreement is slated to be completed in early 2018.

Charlotte Russe, Inc. operates 545 stores in 45 US states and Puerto Rico as well as an online Charlotte Russe store. It expanded its offerings in 2016 with the launch of Peek Kids which operates 11 stores and an e-commerce site.