Bon-Ton Enters Into Forbearance Agreements

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photo credit: The Bon-Ton Stores

The Bon-Ton Stores is on borrowed time.

The retail group announced Tuesday that it has entered into forbearance agreements with its ABL Credit lenders as well as holders of second lien secured notes. The lenders have agreed to give Bon-Ton until Jan. 26 to pay the $14 million interest payment that was due on Dec. 15. That timeframe could be pushed out till Feb. 4 should the lenders agree to extend the date.

The Bon-Ton Stores, which include the Bergner’s, Carson’s and Herberger’s banners, plans to close at least 40 stores this year and is in talks with landlords to negotiate better terms as the company attempts a turnaround. It is also working with its debt holders to improve the retailer’s capital structure.

The retailer has become somewhat of a permanent fixture on bankruptcy watch lists. It carries a reported $900 million in debt and has retained PJT Partners and AlixPartners for operational and financial advisory services.

Last year was rife with retail bankruptcies—many of which were precipitated by heavy debt loads—and some analysts anticipate another wave in 2018 for those chains that failed to act or didn’t do enough of the right things in the face shrinking foot traffic and the growing e-commerce threat.

[Read more about what’s likely to occur this year: Retailers to See a ‘Pay Off or Die Off’ in 2018]

While much of retail is basking in better-than-expected holiday performance, the retail group announced comp store sales decreased by 2.9% in November and December. Though not impressive, the performance was better than the 6.6% decrease in comps in the third quarter. Total sales were $720.8 million compared to $752.1 million during the prior year period.

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