Crafts retailer Joann is negotiating with lenders for a cash infusion to strengthen its cash reserves, Bloomberg has reported.
The discussions aim to prevent a potential Chapter 11 [a form of bankruptcy] filing.
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The company’s cash reserves have come under pressure in a challenging retail environment, prompting the confidential talks.
In December 2023, Joann executed a sale and leaseback transaction for its Hudson, Ohio facility for $34.5m.
For the fiscal quarter ending 28 October 2023, the company reported $28.3m in cash and $72.1m available on an asset-based facility, after accounting for $406.5m in borrowings and $21.4m in letters of credit.
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The retailer’s long-term debt stands at $1.14bn.
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By GlobalDataAdvisory company Houlihan Lokey is providing counsel to Joann, while the lenders have retained Gibson Dunn & Crutcher and hired financial service provider Lazard.
Representatives for the advisory firms have either declined to comment or not responded to approaches.
Joann operates a network of 831 stores across 49 US states and an e-commerce platform.
It reported a slight increase in gross profit to $282.1m in the third quarter of fiscal 2023. Its net sales fell by 4.1% to $539.8m compared with the previous year.
The retailer is not alone in its financial struggles. Several other retailers, including The Children’s Place, Express and Big Lots are also exploring options to improve their financial health.
Department store chain Belk is similarly seeking to refinance its debt.
