BAM Brookfield Asset Management Ltd

By Becky Yerak 

Slip-on footwear company Toms Shoes LLC, backed by Bain Capital, is handing ownership to creditors in an out-of-court recapitalization that includes restructuring $300 million in debt and investing $35 million in the business.

In a letter sent Friday to Toms employees, Chief Executive Jim Alling said the company has signed a deal transferring ownership to investors led by Jefferies Financial Group Inc., Nexus Capital Management LP and Brookfield Asset Management Inc.

"These organizations have all expressed a commitment to our company, our brand and our mission," Mr. Alling said in his letter, a copy of which was reviewed by WSJ Pro Bankruptcy. To show their commitment and support growth, the new owners are investing $35 million into the business and restructuring its balance sheet, he said.

The Los Angeles-based company has struggled with a longer-than-expected turnaround effort and a debt load that matures in late 2020. Bain Capital bought a 50% stake in the business in 2014. Reuters earlier reported on the company's restructuring deal.

Toms was founded in 2006 by Blake Mycoskie and is known for giving a pair of shoes to a poor child for every pair that it sells. Earlier this month, Moody's Investors Service downgraded the company's credit rating deeper into junk territory, declaring Toms at heightened risk of default.

Some of the company's debt stems from Bain's 2014 leveraged buyout, which was valued at about $625 million, The Wall Street Journal reported at the time.

Toms has a $306.5 million senior secured term loan due in October 2020, of which $299 million is outstanding, Moody's said. Fitch Ratings had also said that chances were high that Toms would default this year on its debt.

Toms has been shifting sales to its website as it looks to survive upheaval in the retail industry. Bain Capital couldn't be reached for immediate comment Sunday.

Soma Biswas and Lillian Rizzo contributed to this article.

Write to Becky Yerak at becky.yerak@wsj.com

(END) Dow Jones Newswires

December 29, 2019 17:38 ET (22:38 GMT)

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