Men’s Wearhouse Owner Seeks New Lifeline After Bankruptcy Exit

Males’s Wearhouse proprietor Tailor-made Manufacturers Inc. is in search of a lifeline to assist it keep afloat lower than three months after it emerged from chapter safety.

Tailor-made Manufacturers has “severely underperformed” in comparison with the projections in its Chapter 11 reorganization plan and desires roughly $75 million by the start of March to keep away from a default, in line with courtroom papers.

The corporate has organized a tentative cope with Silver Level Capital, its largest fairness holder and a lender, to offer the funds and assist it keep away from one other chapter, in line with a discover from Mohsin Meghji of M-III Companions.

Plans name for $25 million of funds that rank equal to an present time period mortgage and $50 million of subordinated debt, paperwork present. The $50 million mortgage can be transformed to fairness inside three years at $1 per share.

A consultant for Tailor-made Manufacturers stated in a press release to Bloomberg that the corporate has been in talks to lift extra cash to assist it execute its strategic plan and expects to shut the deal subsequent week. The retailer “has exceeded the forecasts shared with potential buyers in each week of the previous two-and-a-half months,” in line with the assertion.

A consultant for Silver Level declined to remark, whereas representatives for M-III didn’t instantly reply to requests for remark.

Tailor-made Manufacturers filed for chapter final yr after the pandemic dented demand for males’s gown garments. It emerged in December, having lower $700 million of debt. Silver Level grew to become its largest fairness holder as a part of the deal, and low-ranking collectors like landlords and distributors obtained a bit of the corporate’s frequent inventory.

The brand new financing might damage these collectors as a result of a part of the funds can be transformed to fairness, diluting the collectors’ stake. An evaluation from advisers at PJT Companions Inc. instructed the place may very well be lower from 6.7 p.c to lower than 1 p.c. But when Tailor-made have been to file chapter once more, the shares would possible be fully nugatory, in line with the notice.

To assist low-ranking collectors protect worth, Meghji — who’s in control of serving to that group receives a commission — is recommending they money out the shares for $3.3 million in alternate for dropping a possible lawsuit towards Silver Level. The deal is topic to chapter courtroom approval.

Tailor-made Manufacturers continues to be “worse off than most” distressed retailers, experiencing “a double whammy” of each lowered foot visitors to shops and dwindling demand for enterprise and formal apparel, Patrick Collins of legislation agency Farrell Fritz stated in an interview. He represents landlords within the firm’s chapter, and stated their fairness stake within the reorganized firm “may very well be nugatory.”

The pandemic hasn’t been sort to many retailers, particularly people who cater to workplace staff. Lockdowns final yr additionally pushed different struggling retailers together with J.C. Penney Co., J. Crew Group Inc., Neiman Marcus Group Inc. into chapter 11.

Tailor-made Manufacturers traces its roots to 1973, when George Zimmer began Males’s Wearhouse within the Houston space. He would go on to change into the face of the model, starring in tv commercials spouting his catchphrase, “You’re going to love the best way you look — I assure it,” earlier than he was ousted in 2013. It acquired Jos. A. Financial institution the next yr.

By Jeremy Hill and Katherine Doherty