(Bloomberg) -- J. Crew, the preppy clothing retailer known for kicking off a wave of controversial financing deals, launched a $450 million leveraged loan on Thursday to refinance debt.
Goldman Sachs Group Inc. is leading the transaction, which will be issued by an entity called Chinos Intermediate 2 LLC, according to a person with knowledge of the matter. A lender call will take place on Monday Sept. 9 at 1pm New York time, said the person, who asked not to be identified discussing a private transaction.
The company had been reaching out to investors to gauge their interest in a potential deal to refinance a loan it used to exit bankruptcy four years ago, Bloomberg previously reported. J. Crew’s deal comes amid a deluge of issuance for riskier transactions that have kept junk-bond and leveraged loan investors busy since the Labor Day holiday.
J. Crew filed for Chapter 11 in May 2020, marking the first major retailer to fail during the Covid-19 pandemic. Creditors took the keys to the business in exchange for snuffing out $1.6 billion of secured debt. Anchorage Capital Group LLC became J. Crew’s biggest shareholder.
The company’s return to debt capital markets is notable after years of lenders being scarred by so-called creditor violence. Under different owners, J. Crew dodged a default in 2017 by shuffling assets out of reach of creditors in a move that made the retailer synonymous with controversial debt deals.
The transaction resulted in lawsuits and inspired other borrowers to use legal loopholes to pit creditors against each other in transactions that give shareholders more runway to stave off bankruptcy and keep control. It also branded a legal term in debt documents — the J. Crew blocker — aimed precisely at avoiding those type of moves.
(Updates with more context about controversial debt maneuver in fifth paragraph.)
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