Pacific Sunwear of California Inc. will consider a sale once it completes a restructuring of the company, said chief financial officer Michael Kaplan.
Kaplan said Pacific Sunwear considered a sale in 2011, but decided
instead to obtain financing from Golden Gate Capital rather than selling
the company for what it believed was less than fair value. He made his
comments at the 15th Annual ICR Xchange Conference held in Miami on Jan.
Anaheim, Calif.-based Pacific Sunwear also has a $100 million
revolving credit facility from Wells Fargo Capital Finance Inc. it has
yet to draw on, which will provide capital as the company continues the
Golden Gate, a San Francisco private equity firm, invested a $60
million senior secured term loan in exchange for convertible preferred
stock, giving it the right to buy up to 19.9% of common stock, or 16.7%
on a fully diluted basis, at a strike price of $1.75 per share,
according to a Dec. 7, 2011, announcement.
In discussing Pacific Sunwear's restructuring, Kaplan said the first
stage of the turnaround was to sort out the company's real estate
assets. During his presentation, Kaplan said Pacific Sunwear has closed
more than 200 stores since 2010, adding that about 10% of the company's
stores were cash flow negative in 2012, compared to about 30% in 2010.
Pacific Sunwear has aggressively worked to improve its real estate
margins over the past 15 months through a combination of lease
expirations, lease buyouts, rent reductions and landlord renegotiations.
By the end of this year, Pacific Sunwear will have 644 stores, chief
executive Gary Schoenfeld said during the presentation. That's down from
819 stores as of Dec. 7, 2011.
Kaplan later added that the retail chain expects to close another 20
to 30 stores this year that are mostly cash flow negative through lease
expirations, noting that they are not concentrated in any one region.
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( Source Richard Collings www.thedeal.com )