PacSun Sheds Bankruptcy, Emerging as a Private Company
Five months after filing for Chapter 11 bankruptcy protection, Pacific Sunwear of California has been acquired by a San Francisco private-equity investment firm.
Golden Gate Capital completed its acquisition of PacSun, based in Anaheim, Calif., on Sept. 6 when the U.S. Bankruptcy Court in Delaware confirmed the restructuring plan.
PacSun, which was a publicly traded company, will now be a private company.
Golden Gate converted more than 65 percent of its term-loan debt into PacSun equity and provided a minimum of $20 million in additional capital to support PacSun’s long-term growth plans.
Wells Fargo also provided a five-year, $100 million revolving line of credit, which is subject to certain conditions.
The restructuring allows PacSun to either renegotiate its store leases or shutter unprofitable stores that have plagued the retailer that sold surfwear and apparel to teens and young adults.
When the company filed for bankruptcy protection in early April, it had 601 stores in the United States and Puerto Rico. Upon emerging from bankruptcy, it had 583 stores. PacSun said it would be closing 20 stores in the next month.
Gary Schoenfeld, PacSun president and chief executive, said he was pleased that the company exited from bankruptcy so quickly and that all the company’s branded partners would be paid in full as part of the restructuring. “Looking ahead, we plan to continue our brand transformation and deliver our customers the most relevant specialty apparel and sneakers along with the best brands and great style that define PacSun,” he said.
Increasing competition from fast-fashion retailers and a shift in fashion trends contributed to PacSun’s and other retailers’ woes. The company, founded in 1980 to bring the beach to the people, hadn’t turned a profit since 2008. A heavy retail portfolio of nearly 1,000 stores didn't help the bottom line.
For fiscal 2014, the company reported a $29.4 million loss on $826.8 million in revenues. For fiscal 2015, the company had an $8.5 million loss on $801 million in revenues. Same-store sales for 2015 were down 2.6 percent.
