Pacific Sunwear, better known as PacSun, has canceled an assets auction that was scheduled to take place this week and private-equity firm Golden Gate Capital looks set to take ownership of the company.
Documents filed in Delaware bankruptcy court on Friday revealed that no bidders presented prior to the June 15 deadline—apart from Golden Gate Capital—and that no party requested an extension.
PacSun, which filed for Chapter 11 bankruptcy protection in April after reporting a fourth-quarter loss of $10 million, also entered into a debt-for-equity restructuring agreement with Golden Gate at that time. The lender agreed to convert more than 65 percent of the retailer’s term loan debt into the equity of the reorganized company and provide a minimum of $20 million in additional capital when it emerged from the proceedings as a wholly owned private portfolio company of Golden Gate.
Court approval is pending, but expected to be confirmed.
At the time of PacSun’s filing, president and chief executive officer Gary Schoenfeld said, “The bankruptcy process gives us the ability both to fix our balance sheet by reducing our long-term debt by more than 65 percent, and reduce our annual occupancy costs, either through landlord negotiations or lease rejections, appropriately adjusting the fixed costs of operating our stores to better match the shifting retail landscape.”
PacSun operates 593 stores and leases cost the company about $140 million each year.
Since 2007, Golden Gate has acquired or invested in about 20 brands, including Eddie Bauer, Payless and Rocket Dog.