Gottschalks gets DIP financing, going Ch.11
January 14, 2009-- Home Textiles Today,
Fresno, Calif. – Western regional department store chain Gottschalks said it has negotiated $125 million debtor-in-possession financing from a group led by GE Capital, as it files for relief under Chapter 11 of the U.S. Bankruptcy Code.
Gottschalks said it intends to continue operations as it seeks a buyer “or other transaction with a third-party investor” and that the DIP financing “will be sufficient to carry the company through the reorganization process.”
“We expect to proceed quickly and hopefully partner with a new owner that will continue to offer branded high quality merchandise and the special service that we have always provided to our customers,” said chairman and ceo Jim Famalette of the 104-year-old retailer’s outlook.
Gottschalks in 2006 had retained UBS Investment Bank to “explore strategic alternatives,” but that effort produced no decision; Gottschalks in late 2007 said it would review real estate aspects going forward. The company currently operates 58 department stores and three apparel specialty stores.
In March 2007, Gottschalks said it was reducing home textiles as a proportion of its merchandise mix, in favor of its better-producing apparel offerings.
Gottschalks said its principal bankruptcy attorneys are O’Melveny & Myers LLP and Richards, Layton & Finger. The company’s financial advisor is FTI Consulting and its investment bank is Financo; the claims agent is Kurtzman Carson Consultants. No listing of creditors or amounts owed was immediately available.
Last month Gottschalks reported a nine-month, year-to-date loss of $19.7 million – worsened from the year-ago loss of $13.6 million – on sales of $378.0 million.
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