CLIFTON, N.J.–Linens ’n Things has reached a forbearance agreement with its lenders and is seeking to negotiate a capital restructuring, the retailer said in a filing with the Securities and Exchange Commission.
The company said it is in discussions with an ad hoc committee of holders regarding a restructuring of the company’s capital structure. “The lenders under the company’s senior asset-backed revolving credit facility are supportive of efforts toward a consensual restructuring,” according to the filing.
Bob DiNicola, chairman and chief executive officer, offered an update on the retailer’s financial condition.
“Despite the strides that LNT has made to improve the operational side of its business over the past two years, these measures have not produced acceptable financial results,” DiNicola said in the statement from the SEC filing.
DiNicola also addressed Linens ’n Things’ home vendors, many of which have ceased shipping goods to the chain.
“The rapidly increasing financial storm outside the company, together with our operating results, have accelerated credit and insurance problems for our vendors, causing them to recently begin imposing significantly more restrictive payment terms on LNT,” DiNicola said. “These factors have had a dramatic effect on our liquidity outlook for the remainder of the year.”
As a result, the retailer has opted to defer the approximately $16.1 million quarterly interest payment due on April 15 to some of its debt holders “to strengthen our balance sheet and improve liquidity,” DiNicola said.
Linens ’n Things has also hired Conway, Del Genio, Gries & Co. LLC as financial adviser. The committee is represented by financial adviser Houlihan Lokey Howard & Zukin Capital Inc. and the law firm of Kasowitz, Benson, Torres & Friedman LLP.