Buyout Debt Weighs Heavily On Struggling Retailers
Buyout debt is weighing down struggling retailers, something Sports Authority learned the hard way.
The retailer was loaded with at least $643M in debt, left over from the $1.4B leveraged buyout in 2006 by investors led by Leonard Green.
More retailers are feeling that pressure than just Sports Authority—Deb Shops, Dots Stores, Claire’s Stores and Gymboree Corp are all headed for bankruptcy after buyouts by firms including Apollo and Bain Capital.
Those same private equity giants are less likely to come to the rescue this time around, since many sinking retailers are not only loaded with problems, but heavy buyout debt left over from previous deals.
In Sports Authority's case, the retailer has had to abandon its original bankruptcy plan of 140 store closures in favor of liquidation. [Bloomberg]
