Teen lifestyle brand Pacific Sunwear of California Inc. is exiting bankruptcy under new ownership and with several million dollars in extra capital to boot.
Five months after filing for Chapter 11 protection, the struggling mall staple — just one of several big-name retailers to appear on the bankruptcy court docket this year — is now in the hands of private equity firm Golden Gate Capital, which is providing an additional $20 million in capital to the firm.
Golden Gate Capital announced Wednesday that it has closed its acquisition of PacSun, which concludes the retailer’s restructuring after completing its Joint Plan of Reorganization. The plan was confirmed by the United States Bankruptcy Court for the District of Delaware on Tuesday.
In a statement, PacSun President and CEO Gary Schoenfeld said PacSun is emerging from its financial troubles as “a stronger and more competitive” company.
“We thank Golden Gate Capital for their partnership, which enabled PacSun to navigate the restructuring process in only five months, and we look forward to continuing our strong working relationship as we embark on our next chapter,” Schoenfeld said. “For more than 20 years, PacSun has been the largest retail partner for many of our industry’s most dynamic emerging brands, and we are very pleased to have had Golden Gate Capital’s full support in ensuring that all branded partners — both large and small — are to be paid in full as part of our plan.”
Thanks to the restructuring plan, PacSun was able to unload a significant chunk of its debt, shutter several doors and negotiate more competitive rents. Golden Gate said it has converted more than 65 percent of PacSun’s term loans into the equity of the reorganized company. Wells Fargo has also provided a five-year $100 million revolving line of credit.
Looking ahead, Schoenfeld said he plans to continue the brand’s transformation and that his team is “energized as we enter the important holiday season and look further ahead to 2017.”
PacSun operates 583 stores in all 50 states and Puerto Rico.