PLCE - The Children's Place Announces $78.6 Million of Interest-Free Unsecured New Financing to be Provided by Mithaq Capital and the Appointment of Four New Directors | Benzinga
Proceeds of the New Financing from the Company's Majority Shareholder to Be Used
to Support Operations, Including Vendor and Service Provider Payments
Four New Mithaq Nominees Appointed to the Board, with Turki Saleh A. AlRajhi
Named Chairman-Elect During Transition Period
Company Expects to Close Previously Announced $130 Million Term Loan in March 2024; Continues to Explore Alternative Financing on No Less Favorable Terms
SECAUCUS, N.J., Feb. 29, 2024 (GLOBE NEWSWIRE) -- The Children's Place, Inc. (NASDAQ:PLCE), an omni-channel children's specialty portfolio of brands with an industry-leading digital-first model, today announced a new financing agreement with its majority shareholder Mithaq Capital SPC ("Mithaq") to provide $78.6 million of interest-free, unsecured and subordinated term loans to strengthen the Company's liquidity position.
The Company also announced the appointment of four persons nominated by Mithaq to its Board of Directors ("the Board"): Turki Saleh A. AlRajhi, Muhammad Asif Seemab, Muhammad Umair and Hussan Arshad. In conjunction with these appointments, current directors Elizabeth Boland, Alicia Enciso, Katherine Kountze and Wesley McDonald have resigned from the Company's ten-member Board. Mr. AlRajhi has been appointed Chairman-Elect and is sharing the Chairman's duties with Norman Matthews during a transition period.
Additionally, the Board has formed a special committee – the Efficiency and Optimization Committee – comprised of Mithaq appointees Mr. Seemab and Mr. Umair, as well as Jane Elfers, President and CEO and Director. The purpose of the Committee is to identify and make recommendations to the Board with respect to increasing business competitiveness and the efficient cost management at the Company.
Pursuant to the financing agreement, Mithaq provided an initial tranche of $30 million to the Company on February 29, 2024, in the form of an interest-free, unsecured and subordinated term loan (the "Initial Mithaq Term Loan"). Mithaq will also provide an additional $48.6 million interest-free, unsecured and subordinated term loan to the Company (the "Second Mithaq Term Loan" and together with the Initial Mithaq Term Loan, the "Mithaq Term Loans") on or before March 29, 2024, subject to certain conditions. Upon funding of the Second Mithaq Term Loan, at least four of the remaining non-Mithaq appointed directors will resign and directors appointed by Mithaq will comprise a majority of the Board of Directors. The Company has secured certain minority shareholder protections. In addition, the governance agreement(s) require supermajority Board of Directors authorization for certain actions to be taken by the Company during the initial transition period.
The Company expects to be in a position to close the previously announced $130 million term loan (the "Gordon Brothers Term Loan") in March 2024, as contemplated by the non-binding term sheet that the Company entered into with 1903P Loan Agent, LLC, and is continuing to pursue alternative financing on terms no less favorable in the aggregate to the Company.
Turki Saleh A. AlRajhi, Chairman and CEO of Mithaq, commented, "We are pleased to have reached this ...