Pacific Sunwear files for bankruptcy protection

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Source:   —  April 07, 2016, at 6:20 PM

The company'south shares fell as much forty-two % to a record low of five cents in early morning trading. Private investment firm Golden Gate, which plans to get PacSun private after it emerges from bankruptcy, will convert more than sixty-five % of its debt into equity and allow a minimum of $20 million in extra capital, the company said on Thursday.

n">Struggling teen apparel retailer Pacific Sunwear of CA Inc () filed for Chapter eleven bankruptcy protection on Thursday, succumbing to mounting losses and intense contest in the industry.

The company'south shares fell as much forty-two % to a record low of five cents in early morning trading.

Private investment firm Golden Gate, which plans to get PacSun private after it emerges from bankruptcy, will convert more than sixty-five % of its debt into equity and allow a minimum of $20 million in extra capital, the company said on Thursday.

Golden Gate had lent PacSun about $60 million in 2011.

The Anaheim, California-based retailer listed assets in the range of $50 million to $100 million, and liabilities of between $100 million and $500 million, according to a court filing.

PacSun listed sportswear maker Nike Inc () and mall operator Simon Property Grouping Inc () among its top creditors, to which it owes $5.7 million and $3.8 million, respectively.

The company also said it'd a debtor-in-possession credit agreement of $100 million with Wells Fargo Bank.

PacSun'south top investors comprise investment firm GI2 Ltd, which owns a 28.6 % stake, and Adage Capital Management LP with a 14.1 percent stake.

PacSun said it'd continue to work all of its six hundred stores and doesn't expect the bankruptcy filing to have an immediate impact on employees.

In a separate filing, subsidiary Pacific Sunwear Stores Corporation listed assets of $100 million to $500 million and liabilities of $100 million to $500 million.

PacSun, which retails the Kendall and Kylie Jenner clothing line, has been able to report a profit only once in the past six quarters as intense contest from fast-fashion retailers and online rivals has led to slower sales growth.

Rival Aeropostale said in March it was exploring strategic alternatives, including a sale.

PacSun said fourth-quarter sales rose 0.5 % to $232.9 million.

The case is in the United States Bankruptcy court, District of Delaware, Case No: 16-10882.

The stock had fallen 96.6 % in the past twelve months as of Wednesday's close.

(Reporting by Yashaswini Swamynathan and Ramkumar Iyer in Bengaluru; Editing by Sunil Nair and Anupama Dwivedi)

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