Francesca's sold in Chapter 11, plans to keep operating

Women's clothing retailer francesca's received a new $25 million asset-based revolving credit facility after completing a sale of the company through a Chapter 11 reorganization. Second Avenue Capital Partners and Tiger Finance are the lenders.

The lenders are affiliates of the new equity owners of the company. Francesca's Acquisition LLC, an affiliate of TerraMar Capital LLC, Tiger Capital Group LLC and SB360 Capital Group LLC, acquired the debtor's assets, inventory and brand through a Section 363 sale process, a Feb. 1 company statement said. The company plans to expand e-commerce and serve customers through at least 275 boutiques.

Francesca's Holdings Corp. and subsidiaries filed for Chapter 11 protection in December in Delaware. Nasdaq suspended trading of the company's shares in the same month. The company planned to sell the company, close some stores and renegotiate leases through the reorganization process. TerraMar Capital was the stalking-horse bidder. The final asset purchase agreement included $18 million in cash, subject to adjustments, and the issuance by the buyer of a $1.25 million promissory note.

Tiger Finance, the company's pre-petition lender, provided a $25 million debtor-in-possession financing.

Prior to the bankruptcy filing, Francesca's reported a 29% decrease in net sales, to $75.7 million, and a loss per share of $5.80 for the fiscal quarter ended Aug. 1, 2020. The company blamed the bankruptcy on the COVID-19 pandemic. It planned to use the Chapter 11 process to complete a company turnaround.

The company's initiatives prior to the Chapter 11 filing helped the company continue operating in the initial months of the pandemic, such as expanding a loungewear line, selling face masks and self-care items, and building out home accessories and e-commerce, court documents said.