SECAUCUS, N.J. - The Children's Place, Inc. (NASDAQ:PLCE), a leading children's specialty retailer, has entered into a financing agreement with Mithaq Capital SPC, its majority shareholder, to receive $78.6 million in interest-free, unsecured term loans.
This move aims to bolster the company's liquidity, with the first tranche of $30 million already provided on February 29, 2024. An additional $48.6 million is expected by March 29, 2024, subject to certain conditions.
The funding comes at a critical time for The Children's Place, as it aims to secure its operations and manage overdue payments to vendors and service providers.
This financial influx is also part of a broader strategy to improve the company's competitiveness and cost efficiency, as evidenced by the formation of a special Efficiency and Optimization Committee within the Board of Directors.
Concurrent with the funding, Mithaq nominated four new members to the Board, with Turki Saleh A. AlRajhi appointed as Chairman-Elect during a transition period. These appointments follow the resignation of four current directors, paving the way for a majority Mithaq-appointed Board once the second loan tranche is funded.
The Children's Place is also working towards closing a $130 million term loan with 1903P Loan Agent, LLC in March 2024 and continues to seek alternative financing options. The company has secured a forbearance agreement with its bank lenders following a change of control default triggered by Mithaq's acquisition of common stock, allowing the company to proceed with the new term loans.
This financing strategy is part of The Children's Place's efforts to navigate through recent challenges, including halted services from key vendors due to delayed payments. The company is engaged in ongoing discussions to resolve these issues and plans to utilize a portion of the loan proceeds to address these critical operational needs.
The Children's Place, known for its digital-first retail approach, operates more than 500 stores in North America and distributes its products in 16 countries. Mithaq Capital SPC, part of Mithaq Holding Company, is a value-focused family office with diverse investments, including in The Children's Place.
This report is based on a press release statement from The Children's Place, Inc.
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