With support from shareholders, J. Jill has forged an agreement with lenders holding more than 70% of its term loans to waive past non-compliance with the terms of its credit facilities and provide additional liquidity. The company has entered into a series of forbearance agreements in recent weeks and on Tuesday said they were extended again to Sept. 26, according to a Securities and Exchange Commission filing.
The out-of-court transaction, which still requires some consents, would extend the maturity of some debt by two years, through May 2024. If the full consents aren't obtained, the struggling women's apparel retailer will turn to bankruptcy court, according to a company press release.
The agreement entails "new money investment of no less than $15 [million] in the form of a junior term loan facility," the company said. Under Chapter 11, the company would seek new money investment of up to $75 million in debtor-in-possession financing that would convert to a new term loan maturing five years after the company emerges from that process.
J. Jill was scrambling to right its merchandising and reverse sales declines — a situation that may have sent its CEO packing at the end of last year — and the pandemic has only added to its woes.
Some apparel retailers eked out something of a recovery in the second quarter as more consumers bought clothing. The retailer hasn't yet reported on its second quarter performance, but hasn't likely benefited much from that fairly weak trend. In its first quarter, the company swung to a loss in a few measures, recording an $89.7 million loss from operations, (or, excluding non-recurring and impairment expense, a $35.6 million loss), compared to $10.8 million in operating income a year ago; net loss was $70.3 million, from net income of $4.4 million last year.
S&P Global Market Intelligence last month added the retailer to its list of most vulnerable publicly traded retailers. J. Jill has a 16.8% probability of default over the next 12 months, S&P Global said.
J. Jill's press release on Tuesday adds the retailer's own voice to existing speculation that it could enter bankruptcy protection. The apparel seller went into forbearance with its lenders, extending that multiple times, reportedly hired law firm Kirkland & Ellis, which is known for retail restructuring and bankruptcy work, and has warned investors that it might not survive the year.
The retailer has joined others in reopening stores, though some will remain closed permanently. Plans are to end the year with 275 locations.