The struggling womenswear chain has entered into two forbearance agreements after falling out of compliance with certain covenants under its asset-based lending and term loan credit facilities. As part of the respective deals, its lenders have agreed not to exercise any rights and remedies against the company until July 16.
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So long as it remains compliant with the terms of those agreements, J.Jill has been granted a month to explore financial options as it grapples with cash flow challenges that have accelerated amid the coronavirus pandemic.
“These forbearance agreements will allow us to continue to work with our lenders on a course of action that will resolve the company’s noncompliance and position the company to realize its long-term plans,” interim CEO Jim Scully said in a statement. “We appreciate the patience and support of our associates, vendors and suppliers.”
Notice of the agreements were made public in a series of filings with the Securities and Exchange Commission on Monday, when J.Jill reiterated that it faced “substantial doubt” about its ability to continue as a going concern.
In accordance with government-mandated lockdowns starting mid-March, the company shuttered all of its stores across the country. Currently, about 85% of its total brick-and-mortar fleet is back in business as state and local authorities gradually ease restrictions on nonessential business, and J.Jill expects to continue reopening outposts in a phased approach.
For the fiscal year ended Feb. 1, the Massachusetts-based retailer logged sales of $691.3 million, compared with the prior year’s $706.2 million. It also recorded a net loss of $128.5 million, or a loss of $2.94 per diluted share, versus the 2019 fiscal year’s profits of $30.5 million, or earnings of 69 cents a share. It ended May with about approximately $60 million at hand.
To reduce expenses, J.Jill has drawn down $33 million under its revolving credit facility, as well as furloughed store associates, reduced the base salaries of its executive officers and foregone its board of directors’ fees.
“The company has strong liquidity to meet its financial obligations reflected by our cash balances at the end of May and appreciates the partnership of its vendors and suppliers,” added EVP and CFO Mark Webb.