Wet Seal defaults on loan

Apparel line Wet Seal (NASDAQ:WTSL) has received a notice of default on $27 million in senior convertible loans. Last month the chain announced there was doubt it could continue operating and now it owes $28.8 million, plus costs of collection, attorneys' fees and disbursements.

The creditor, Hudson Bay Master Fund, entered an agreement with the brand that lasts until Jan. 12, giving the retailer a two-week reprieve, reported Bloomberg.

Wet Seal has lost more than $150 million in the past two years and is expected to lose another $88 million in fiscal 2015. Difficulties are attributed to the growing popularity of fast-fashion retailers such as H&M, as well as a slowing down of mall traffic.

On Dec. 12, the company announced it had assembled a team to identify and analyze potential strategic and financial alternatives, a sign that the teen apparel retailer could file for Chapter 11 bankruptcy protection. The team consisted of Houlihan Lokey as an investment banker and William Langsdorf as a senior advisor.

Wet Seal has appointed several new executives in the past few months, including CEO Ed Thomas, to orchestrate a turnaround. It has also been closing stores, eliminating brands and cutting costs.

For more:
-See this Bloomberg article

Related stories:
Wet Seal to reduce staff, cut costs
Wet Seal taps PacSun exec as executive VP and chief merchandising officer
Wet Seal to close Arden B, expand plus-size juniors
Wet Seal adds mobile payments with a teenage twist
Wet Seal appoints three new board members

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