Live Markets: Distressed investment specialist extends lifeline to embattled retailer The Children's Place

Children's Place

16/02/2024 17:23

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    DISTRESSED INVESTMENT SPECIALIST EXTENDS LIFELINE TO
EMBATTLED RETAILER THE CHILDREN'S PLACE 
    The Children's Place  PLCE.O , a seller of kids' clothes
whose earnings update last week sent shares into a tailspin,
said it had signed a non-binding agreement for a $130 million
loan from distressed investment specialist Gordon Brothers. 
    The move drove the apparel firm's shares up 5%, building on
and 81% gain from Thursday as investors' concerns about
liquidity, at least for the near term, eased. 
    The 55-year old company is one of several retailers that
have come under pressure after tough economic conditions and
worries stemming from the Federal Reserve's monetary tightening
led some customers to cut back their discretionary spending.
    Last week, it said it was working with advisers and lenders
to obtain "new financing necessary to support ongoing
operations" and was "considering strategic alternatives" in the
event that the efforts do not pay off. 
    The disclosure led to a 37% plunge in the company's stock
price last Friday, allowing a pair of investment firms to snap
up shares cheaply. Snowball Compounding Ltd and parties related
to Mithaq Capital, which reportedly manages money on behalf of
Saudi Arabia's influential al-Rajhi family, now own 54% of the
company's stock.
    Mithaq purchased the struggling retailer's shares on the
open market, instead of agreeing to a traditional merger, an
unusual way of gaining control of a company. The group is now
seeking to replace the company's board.  
    The capital would be used for repayment of another $50
million loan that The Children's Place took from six banks,
including JPMorgan Chase  JPM.N  and Bank of America  BAC.N . 
    It would also be for paying the money owed to vendors and
for other business purposes.
    The loan is secured by claims on the retailer's intellectual
property and certain other assets. It would mature in Nov. 2026.
    
    (Niket Nishant)
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