Loehmann’s Seals Restructuring Plan

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Loehmann'sNew York–Loehmann’s reached an agreement with the official committee of creditors to proceed with its restructuring plan when it raised the pot for unsecured creditors to $2 million. Under terms of the recent agreement, Loehmann’s will remain on track to successfully exit Chapter 11 on or before February 18, 2011.

The plan includes a rights offering to the company’s senior secured Class A Noteholders, which is being backstopped by Istithmar World and Whippoorwill Associates, as agent for its discretionary funds and accounts, which represents approximately 70% of its senior secured notes, Loehmann’s said.

The company will receive a $25 million capital infusion upon emergence from Chapter 11. Under the terms of the global settlement agreement between the parties, general unsecured creditors will receive a pro rata distribution consisting of cash in the aggregate amount of $2 million. The creditors committee has agreed to fully support the proposed restructuring plan, which should pave the way for an expedited chapter 11 process.

The company had already reached an earlier agreement with Whippoorwill Associates and its equity sponsor, Istithmar World, on the restructuring plan that will substantially reduce the company’s debt and recapitalize its balance sheet.

Loehmann’s has secured court approval for a $33 million revolving credit facility with Crystal Financial LLC for post-petition financing and an additional $7 million junior facility by Whippoorwill, which will be made immediately available, a statement added. With these capital commitments, Loehmann’s said it will have sufficient liquidity and the financial flexibility to fund daily operations without interruption.

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