Follow the pattern

14 June 2017 By Lauren Silva Laughlin Follow @TheRealLSL

The retailer is trying to restructure $567 mln of debt giving some bondholders access to valuable assets that will irk other lenders. To bridge the gap, they’re offering those lenders buyouts at par. It’s a clever way to mend several problems. Other wobbly retailers take notice.

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J.Crew has made a debt offer to bondholders of the company’s paid-in-kind notes with a face value of $567 million. In exchange for each $1,000 of notes, bondholders will receive $441 of new notes, $335 in preferred stock in J.Crew, and 30.7 shares of stock in J.Crew. In total the company will have $250 million of new notes. The exchange is subject to approval of 95 percent of the term loan holders.

Separately, J.Crew has offered to retire $150 million of the company’s term loan at par, which will be financed with some new debt and cash from the private-equity owners. In exchange, the lenders must agree to drop current litigation. The offer is subject to approval of 50.1 percent of lenders.

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