Linens
Linens ‘n Things Inc. will defer a $16.1 million interest payment due Tuesday and is in talks about staging a capital restructuring with the interest holders.
The announcement comes as bankruptcy talk has swirled around the struggling home-goods retailer, which has been caught by an increasing debt load and shrinking housing market.
The Clifton, N.J.-based chain, which had 589 stores in 47 states as of Dec. 29 and employs 17,000 people, was acquired in February 2006 by Apollo Management LP for $1.3 billion. The housing crisis made the home-furnishings space ultracompetitive, and the debt on the retailer’s balance sheet gave it diminished flexibility to ride out the downturn.
Amid a disappointing holiday season and flat same-store sales, Linens ‘n Things lost $62 million on sales of $962 million in the fourth quarter.
Chairman and Chief Executive Robert J. DiNicola said Tuesday that despite the efforts made to improve operations since Apollo’s takeover, "these measures have not produced acceptable financial results pay day loans easy payday loan. The increasing deterioration of the credit markets and the residential real estate meltdown, both stemming from the turmoil in the subprime mortgage market, and the resulting downturn in consumer spending, especially in the home sector, have combined to create additional and acute financial challenges for the company and the retail sector as a whole."
The troubles "have had a dramatic effect on our liquidity outlook for the remainder of the year," he added. "We have made the decision to postpone today’s interest payment as we continue to work with our constituencies to explore a number of alternatives to strengthen our balance sheet and improve liquidity."