Image source: Alex and Ani
Rhode Island-based jewelry retailer Alex and Ani LLC has filed for Chapter 11 bankruptcy protection and put itself up for sale.
On Thursday, the company said it entered into a restructuring support agreement (RSA) with debt holders and equity sponsors as it works to reorganize and strengthen its online and retail businesses.
During the process, which is being conducted through the United States Bankruptcy Court for the District of Delaware, Alex and Ani said it plans to continue operating its stores and website as usual.
In a statement, chief restructuring officer Robert Trabucco said, “By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly right-sizing of our balance sheet and operations.”
“This process and proposed transaction is positive news for our employees, our customers and our suppliers. Alex and Ani will have enhanced access to the financial resources with an optimized capital structure necessary to continue to prosper and grow.”
Launched in 2004 by Carolyn Rafaelian, Alex and Ani is known for its bangles, charm bracelets and necklaces and has locations in the US, Aruba and Panama.
Within a few years of starting the business, Rafaelian expanded to 1,000 employees, opened more than 100 stores and was producing more than 10 million bracelets annually. Rafaelian stepped down as chief executive officer in 2019 after British private equity firm Lion Capital increased its stake in the company.
In Alex and Ani’s chapter 11 filing, Trabucco said the rapid growth caused the company to struggle “to keep up with demand.” It also dealt with “significant” management turnover, surplus inventory, “burdensome” leases and inventory management issues, he said.
"We have worked diligently to overcome challenges with our capital structure, and we are very pleased with our progress from an operational efficiency standpoint," he said on Thursday.
“In 2020, COVID-19 forced the company to pause its key strategic growth initiatives, temporarily close stores and scale back its operations in light of reduced in-store customer demand. During that time, Alex and Ani continued to invest in its eCommerce platform," Trabucco stated.
According to Bloomberg News, the company’s estimated assets ranged from $100 million to $500 million as did its estimated liabilities. Its largest unsecured creditors are mall owners Simon Property Group and Brookfield Property Partners, with each being owed more than $3 million in rent payments.
The chain now has about 530 part- and full-time employees working in 74 stores, about a third of which are still closed due to the COVID-19 pandemic, Bloomberg noted.
Source: Equities News