Rue21 Said to Hire Rothschild as Debt Sinks Deep in Distress

Rue21 Inc., a teen clothing retailer controlled by Apax Partners, hired Rothschild Inc. to help tame its nearly $1 billion debt-load, according to people with knowledge of the matter.

The advisory firm is to look at various options including working with Rue21’s senior lenders to give the chain some breathing room as it tries to turn around its business, said the people, who asked not to be named because the discussions are private.

Rue21’s bonds, meanwhile, continue to sink to deeply distressed levels. The retailer’s $250 million of 9 percent senior unsecured notes maturing 2021 dropped another 1.3 cents after the news of Rothschild’s hiring to last trade at 18.6 cents on the dollar late Thursday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded as high as 87 cents in early 2015.

Representatives for Rue21 and Apax declined to comment. Rothschild didn’t comment.

Like other smaller retailers, including Gymboree Corp. and True Religion Apparel Inc., Rue21 has been struggling with online competition while attempting to reduce debt. The company’s ratings were cut last month by S&P Global and Moody’s Investors Service.

Rue21 made key hires in recent months including naming chief financial officer Keith McDonough as interim CEO and bringing in Nina Barjesteh from Target as chief merchandising officer.

Rue21, which was taken private by Apax in 2013 for about $934 million, has seen same-store sales under pressure and adjusted earnings before interest, taxes, depreciation and amortization fell 56 percent in the third quarter, according to Moody’s.

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