BCBG Stiffs Vendors in Efforts to Refinance

May 27, 2011 • Designers, Fashion Blog

As already reported, BCBG has been maxed (as in Max Azria) out…overextended. Now according to WWD, BCBG Max Azria Group Inc. is making its vendors and creditors wait while they try to negotiate new debt agreements. They are trying to refinance the company’s debt and untangle a web of interconnected financial arrangements.

WWD has learned from credit sources that the firm has been slow in paying creditors. Some have been unpaid since February.  According to one credit contact the fashion house told creditors last week BCBG had “suspended” all payments pending completion of new financing arrangements. This week some creditors were told the deal is due to be completed by June 14 but that BCBG couldn’t confirm when payments would be made to creditors or whether they would even be paid in full by the end of June. Yikes.

BCBG has been trying to complete a deal to secure a new $230 million term loan to refinance a portion of its debt. A $94 million first-lien term loan comes due on Aug. 10, but that date would be moved up to June 16 if the $230 million term loan isn’t completed. If and when it’s refinanced, its maturity would extend until 2015. The company hopes to complete the refinancing by June 14, in advance of the deadline.

S&P gave the proposed senior secured first-lien term loan a rating of “B-minus,” six ticks below investment grade, and raised BCBG’s corporate credit rating to “B-minus” from “CCC-plus.” While risky, a rating in the “B” family indicates that the debtor has the capacity to repay its obligations. Goldman Sachs is said to be working on the proposed financing.

Azria has been busy building up his fashion empire even with a worsening cash crunch which may prove to be his empire’s undoing. And the proposed the initial public offering never materialized. To add insult to injury BCBG’S public relations representative sent out an e-mail Thursday saying she had resigned.

It will be interesting to see how this all plays out.

Source: WWD

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2 Responses to BCBG Stiffs Vendors in Efforts to Refinance

  1. Anonymous says:

    I feel like this is a sugar coated version of how much and how many vendors have not been paid. Dont forget that they spent a lot of money redesigning offices and did not get a renewed contract with Wal Mart. Also, laid off 200+ employees and the next month had a spread in Bizaar magazine showing the Azria’s new house with furniture and artwork they specifically had their own employees design for them.

  2. Rocky says:

    Max Azria is a megalomaniac – he wants to accomplish deals while his company is tanking down.

    It seems that all his genius to buy time is coming to an end, finally reality will catch him up.

    He will get refinancing only under very severe covenants that will dangerously cripple the profitability – it is a trap whose only solution would be high sales and profitability but the company is poorly managed, and the market conditions are adverse.

    Future will tell, my guess is that, at the latest at the 1st quarter of 2012, there will be real trouble.

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