April 8, 2016
By: Daniella Soloway
It’s not all sunny at Pacific Sunwear. The retailer who targets teens and sells mostly beachwear has filed for bankruptcy protection, as high rents and large debt continue to burn the retailer’s bottom line.
With 600 stores, the company has not disclosed where closings will be begin, but they are likely to occur after the back-to-school season.
Private equity firm Golden Gate will exchange 65% of PacSun’s debt for equity and infuse $20 million in capital. Wells Fargo is also providing $100 million under its Chapter 11 filing.
Last year, PacSun achieved just about $801 million in annual sales. However, with $90 million in long-term debt coming due, paired with extremely high rents, PacSun has taken this route to “solve the structural issues that operationally we could not fix on our own,” said CEO Gary Shoenfield.