Rue21 has an agreement in principle with lenders that would address its working capital needs and “preserve continuity for the company’s vendors and suppliers,” the teen retailer said in an emailed statement.
The company, which is privately held, did not elaborate on the deal or disclose terms. Rue21 CEO Bill Brand thanked the company’s lenders in a statement for “their continued belief in our company.”
Bloomberg Law reported last week, citing anonymous sources, that the retailer had received a proposal from lenders that would “likely help it avert a second bankruptcy.”
That followed an earlier report from The Wall Street Journal that Rue21 was working with Ducera Partners to explore refinancing and restructuring options following a drop in sales.
In its statement Tuesday, Rue21 confirmed that it worked with Ducera on its deal, as well as the law firm Akin Gump Strauss Hauer & Feld and financial advisory Alvarez & Marsal.
Brand also alluded to sales challenges in the current market.
“Much has been written about the challenging retail environment and Rue21 is not immune to those challenges. In fact, our customers have been among the most significantly — and earliest — impacted by record inflation,” Brand said. “We believe Rue21 has an important role in the retail landscape and, upon the consummation of this agreement, we'll have the capital to secure it.”