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Loehmann's default
Monday, November 01, 2010
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Tags: Retail news   

Loehmann’s defaults on bonds, mulls reorganization

Discount designer retail chain Loehmann’s, owned by a unit of Dubai World, is in talks with lenders over a possible reorganization after the company failed to receive enough bondholder support for a private note exchange offer. The company offered to exchange outstanding 12% notes due 2011, floating-rate notes due 2011, and 13% notes due 2011 for new notes maturing in 2014. However, the company received acceptances for just 92.4% of principal of the new notes, short of the required 97%.
 
Loehmann’s Capital therefore will not complete the note exchange. In addition, the company will miss a 30-day grace period on an interest payment that was due in October, thus defaulting on the bonds and a revolver between an operating subsidiary and Crystal Financial.
 
“Loehmann's is continuing its discussions with certain significant holders of the old notes and Crystal regarding forbearance agreements and is exploring all of its alternatives, including a possible pre-negotiated reorganization proceeding,” the company said in an Oct. 29 statement.
 
In September 2004, the company sold a three-part bond issue through bookrunner Jefferies & Co. The niche offer came at guidance and size, raising $110 million to help fund a leveraged buyout by Crescent Capital Investments for $177 million. A $55 million issue of 12% class A-1 senior secured notes due 2011 and a $20 million issue of L+800 class A-2 senior secured floating-rate notes due 2011 both priced at par. A $35 million issue of 13% class A-2 senior secured floating-rate notes priced at 95.6.






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