Eddie Bauer to File for Bankruptcy?

Eddie Bauer

After a big marketing push for their new First Ascent mountaineering line, it looks as though Eddie Bauer may be filing for bankruptcy protection this week. According to Bloomberg, a final decision has not yet been made.

During the economic downturn, the retailer has seen a dramatic sales decline, mountain of losses and as a result has struggled to service its debt. Eddie Bauer reported having $268 million in outstanding debt, including $193 million in term loans and $75 million in convertible notes, which company executives have been trying to convert into shares of the company. On a press call in May, CEO Neil Fiske said: “The single biggest issue facing this company is our debt burden. Our capital structure simply has too much debt for the economic reality we now face.”

Eddie Bauer reported net losses of $165.5 million in fiscal year 2008, part of a total of $478.7 million in losses during the past three fiscal years. In the first quarter that ended in April, the company reported net losses of $44.5 million and total revenues for the quarter fell to $179.8 million from $213.2 million in 2008.

According to Bloomberg, a few Private Equity houses are interested in the Company's assets including, Hilco Consumer Capital, CCMP Capital Advisors and Gordon Brothers Group. Filings with the Securities and Exchange Commission listed Eddie Bauer as having total assets of $525.22 million as of April. The company listed total liabilities of $448.9 million.

Quiksilver was able to recapitalize so let's hope Eddie Bauer is able to do the same. Shareholders rejected Eddie Bauer's $285 million sale in 2007- I bet they are rethinking that now….

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