The Bon-Ton Stores Inc. has entered into forbearance agreements with its lenders following failure to make a $14 million debt payment within the 30 day grace allowed after originally postponing the payment.
The agreement between Bon-Ton and ABL Credit Agreement lenders and an ad hoc group of holders is not a long-term solution for Bon-Ton, but rather a plan that will give the struggling retailer time to make its loan payment.
ABL Credit Agreement lenders and the ad hoc group of holders control approximately 75 percent in aggregate principal amount of the company’s 8 percent second lien secured notes (2L Notes) due 2021.
Under the terms of the agreement, the ABL Credit Agreement lenders and the forbearing holders of the 2L Notes have agreed to forbear from exercising any and all remedies available to them as a result of Bon-Ton not paying its loan due Dec. 15, according to a Dec. 18 SEC filing.
The agreement expires on Jan. 26, unless further extended by the parties.
The forbearance period under the ABL forbearance agreement will be automatically extended to Feb. 4 if the forbearing holders of the 2L Notes agree to extend to such date.
The Milwaukee and York, Pennsylvania-based Bon-Ton Stores Inc. has not turned an annual profit since 2010.
The retailer operates 260 department stores in 24 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers brands. As of the end of last year the company had 267 stores. In November, Bon-Ton announced it would close at least 40 stores through 2018.
On Jan. 12, Bloomberg reported Bon-Ton’s senior creditors are pushing the retailer to file for bankruptcy, a development that could happen as soon as this month.
S&P Global downgraded Bon-Ton in late December with analysts believing the company’s delay on its Dec. 15 loan payment was a sign the company is headed toward debt restructuring or possible bankruptcy.
Bon-Ton stock was trading at 23 cents Tuesday afternoon.
