(Reuters) – Eddie Bauer Holdings Inc (EBHI.O) filed for Chapter 11 bankruptcy protection on Wednesday, sending its shares down 28.9 percent.
The filing, made in U.S. Bankruptcy Court in Delaware, is the second bankruptcy for the company, which was started as a sport shop in 1920 in Seattle by its namesake.
According to the court filing, the outdoor apparel retailer is planning to sell nearly all its assets to Rainier Holdings LLC. Its board has also received a limited guarantee from two affiliates of CCMP Capital Advisors LLC on some of the buyer’s payment obligations.
The company blamed its debt load, citing concern it might not be able to comply with conditions attached to its $225 million senior term loan facility..
Eddie Bauer said Bank of New York Mellon Corp (BK.N), as bond indenture trustee, is its largest unsecured creditor, with a $75 million claim.
In the filing, Eddie Bauer said it secured “debtor-in- possession” financing from a group led by Bank of America Corp (BAC.N) and CIT Group Inc (CIT.N).
Eddie Bauer has been posting losses on falling sales this year. The company said in January it hired investment banking firm Peter J. Solomon Co for restructuring advice and it has been working to cut costs and preserve cash.
The retailer emerged from Chapter 11 bankruptcy in 2005 after former owner Spiegel Catalog sought bankruptcy protection in 2003.
At the time of its emergence, the company had more than 400 stores in the United States and Canada. It now has about 370 stores in North America and 10,000 employees worldwide, according to its website.
The company said last month its first quarter revenue fell 16 percent to $179.8 million. It has more than $300 million in outstanding debt, according to SEC filings.
Eddie Bauer shares were down nearly 7 cents, or 28.9 percent, at 16 cents in afternoon trading on Nasdaq.
(Reporting by Martinne Geller and Aarthi Sivaraman; additional reporting by Phil Wahba; editing by Lisa Von Ahn and Andre Grenon)