Implements Path Forward to Enhance
Profitability and Continue Its Ongoing Sale Process
Destination Maternity Corporation (NASDAQ: DEST) (“Destination
Maternity” or the “Company”), the premier national retailer for
maternity apparel and accessories, today announced that it and
certain of its subsidiaries have filed voluntary petitions to
restructure under chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”).
The Company filed to facilitate and continue a marketing process
begun in early September that has already yielded indications of
interest from several credible bidders.
To help fund and protect its operations during the chapter 11
process, Destination Maternity obtained consent to use cash
collateral from all of its prepetition secured lenders. The Company
believes that this access to liquidity will be sufficient to pay
suppliers and other business partners and vendors for authorized
goods and services provided post-filing and during the chapter 11
process.
In connection with that agreement, the Company and its lenders
agreed to several milestones related to the chapter 11 cases and
marketing process, which call for, among other things, binding bids
to be submitted by December 5, 2019, an auction to be held on
December 9, 2019, and entry of an order by the Bankruptcy Court
approving the sale by December 12, 2019. Parties interested in
participating in the marketing process should contact the Company’s
investment bank, Greenhill & Co., LLC (Neil Augustine,
neil.augustine@greenhill.com, and Peter Johns,
peter.johns@greenhill.com).
The Company also intends to use the court-supervised process to
optimize the Company’s operations, including by right-sizing the
Company’s brick-and-mortar store footprint. Destination Maternity
is expected to continue to operate and serve its customers,
vendors, and partners, and pay its employees in the ordinary
course.
“This decision is a difficult, but necessary one,” said Lisa
Gavales, Chair of the Office of the CEO of the Company. “In a
challenging retail environment, we have had to make some very tough
choices, but we are confident that the steps taken today provide an
opportunity to continue a marketing process that provides the most
efficient means of maximizing value to our stakeholders. Throughout
this process we will be focused on developing the promising
interest already shown by potential bidders, and maintaining
operational momentum toward a stronger business.”
Throughout this process, Destination Maternity, A Pea in the
Pod, and Motherhood stores will continue to deliver the
high-quality products and services to which its customers are
accustomed to both in stores and on-line. Destination Maternity is
also filing customary first day motions that, once approved by the
Bankruptcy Court, will allow the Company to smoothly transition its
business into chapter 11.
Court filings and other documents related to the
court-supervised process are available at
https://cases.primeclerk.com/DestinationMaternity/ or by calling
the Company's claims agent, Prime Clerk LLC. We have also set up a
special restructuring information line to field inquiries from all
of our stakeholders in the days ahead. That number is (877)
430-6130 or, if you are calling from outside the U.S. or Canada, at
(917) 962-8962.
Kirkland & Ellis LLP is acting as the Company’s legal
counsel, Greenhill & Co., LLC is acting as investment banker
and Berkeley Research Group, LLC (“BRG”) is serving as Destination
Maternity’s restructuring advisor while BRG’s Robert J. Duffy has
been appointed as the Company’s Chief Restructuring Officer.
About Destination
Maternity
Destination Maternity is the leading designer and omni-channel
retailer of maternity apparel in the United States, with the only
nationwide chain of maternity apparel specialty stores, as well as
a deep and expansive assortment available through multiple online
distribution points, including our three brand-specific websites.
As of August 3, 2019, we operate 937 retail locations, including
446 stores in the United States, Canada and Puerto Rico, and 491
leased departments located within department stores and baby
specialty stores throughout the United States and Canada. We also
sell our merchandise on the Internet, primarily through our
Motherhood.com, APeaInThePod.com and DestinationMaternity.com
websites. We also sell our merchandise through our Canadian
website, MotherhoodCanada.ca, through Amazon.com in the United
States, and through websites of certain of our retail partners,
including Macys.com. Our 446 stores operate under three retail
nameplates: Motherhood Maternity®, A Pea in the Pod® and
Destination Maternity®. We also operate 491 leased departments
within leading retailers such as Macy’s®, buybuy BABY® and
Boscov’s®. Generally, we are the exclusive maternity apparel
provider in our leased department locations.
Forward-Looking
Statements
The information in this press release includes “forward‑looking
statements.” All statements, other than statements of historical
fact included in this press release, regarding our strategy, future
operations, financial position, estimated revenues and losses,
projected costs, prospects, plans and objectives of management are
forward-looking statements. When used in this press release, the
words “could,” “should,” “will,” “may,” “believe,” “anticipate,”
“intend,” “estimate,” “expect,” “project,” and similar expressions
are intended to identify forward‑looking statements, although not
all forward‑looking statements contain such identifying words.
These forward‑looking statements are based on our current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. These forward‑looking statements are based on
management’s current belief, based on currently available
information, as to the outcome and timing of future events, actions
and developments.
These forward-looking statements relate, in part, to (i) the
Company’s ability to obtain Court approval of the Plan or any other
plan of reorganization, including the treatment of the claims of
the Company’s lenders and trade creditors, among others; (ii) the
Company’s ability to obtain approval with respect to motions in the
chapter 11 cases and the Court’s rulings in the chapter 11 cases
and the outcome of the chapter 11 cases in general; (iii) the
length of time the Company will operate in chapter 11; (iv) risks
associated with third-party motions in the chapter 11 cases, which
may interfere with the Company’s ability to develop and consummate
the Plan or other plan of reorganization; (v) the potential adverse
effects of the chapter 11 cases on the Company’s liquidity, results
of operations or business prospects; (vi) the ability to execute
the Company’s business and restructuring plan; (vii) increased
legal and advisor costs related to the chapter 11 cases and other
litigation and the inherent risks involved in a bankruptcy process;
and (viii) other factors disclosed by the Company from time to time
in its filings with the SEC, including those described under the
caption “Risk Factors” in the Company’s Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q. We do not intend to publicly
update or revise any forward-looking statements as a result of new
information, future events or otherwise, except as required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191021005802/en/
Sloane & Company Erica Bartsch, 212-446-1875
Ebartsch@sloanepr.com
Alex Kovtun, 212-446-1896 Akovtun@sloanepr.com
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