U.S. retailer rue21 in search of financing months after exiting bankruptcy
U.S. teen retailer rue21 Inc, which exited bankruptcy in September, is seeking financing after lackluster holiday sales failed to generate the cash it had hoped for, people familiar with the matter said on Friday.
The move makes rue21 the latest U.S. brick-and-mortar retailer to have emerged from bankruptcy with its debt pile reduced only to end up struggling financially again, as shoppers shift much of their spending online and consumer tastes change rapidly.
The retailer, known for its low-priced fashion-forward apparel for young men and women, has hired investment bank Piper Jaffray Companies to help raise funds, the sources said. The size of the loan rue21 is seeking could not be learned.
Warrendale, Pennsylvania-based rue21 declined to comment. Piper Jaffray did not respond to a request for comment.
The company is one of more than 15 retailers that filed for bankruptcy last year and was forced to close around 400 of its approximately 1,100 stores.
The retailer exited bankruptcy with a loan backed by its assets of up to $125 million, and a term loan of $50 million, according to court filings from its bankruptcy. The retailer managed to slash its debt by about $700 million during the bankruptcy process.
Were rue21 to file for bankruptcy again, it would join retailers such as Wet Seal and American Apparel that went through the bankruptcy process more than once.
The company has struggled to differentiate itself from competitors such as Zara, Forever 21 and H & M Hennes & Mauritz AM which offer similarly priced clothing and accessories.
Creditors, including hedge funds BlueMountain Capital Management LLC, Southpaw Asset Management LP and Pentwater Capital Management LP, won control of the company last year as part of the bankruptcy.
Before the bankruptcy, rue21 had been controlled by private equity firm Apax Partners LLP, which had acquired it in 2013 for $1.1 billion.
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