Loehmann's Reaches Agreement with Secured and Unsecured Creditors to Proceed With its Restructuring Plan

NEW YORK, Dec. 15, 2010 /PRNewswire/ -- Loehmann's Capital Corp. and its affiliates ("Loehmann's" or the "Company") announced today that they have reached agreement with the official committee of unsecured creditors to proceed with its restructuring plan, allowing the Company to remain on track to successfully exit chapter 11 on or before February 18, 2011.  Through a rights offering to the Company's senior secured Class A Noteholders, which is being backstopped by Istithmar World and Whippoorwill Associates, Inc., as agent for its discretionary funds and accounts, which represents approximately 70% of its senior secured notes, the Company will receive a $25 million capital infusion upon emergence from chapter 11.  Under the terms of the global settlement agreement between the parties, general unsecured creditors will receive a pro rata distribution consisting of cash in the aggregate amount of $2 million.  The creditors committee has agreed to fully support the proposed restructuring plan, which should pave the way for an expedited chapter 11 process.

The Company had already reached an earlier agreement with Whippoorwill Associates, Inc., and its equity sponsor, Istithmar World, on the restructuring plan that will substantially reduce the Company's debt and recapitalize its balance sheet.

Loehmann's has secured Court approval for a $33 million revolving credit facility with Crystal Financial LLC ("Crystal") for post-petition financing and an additional $7 million junior facility by Whippoorwill, which will be made immediately available to the Company.

With these capital commitments, Loehmann's will have sufficient liquidity and the financial flexibility to fund daily operations without interruption.  The additional $7 million revolving loan facility will also allow the Company to commence the purchase of Spring inventory, reserve inventory (products bought at the end of a selling season to hold for the next season) and make-up inventory (products manufactured specifically for Loehmann's).  

Loehmann's continues with normal operations including special holiday promotions, and will be rolling out a series of new strategic business initiatives as part of its reorganization including:

• Highlighting the "Back Room" as a continued key differentiator and cornerstone of the business, and
• Reallocating marketing funds to reach new and additional customers

About Loehmann's

Founded in 1921 as the "Original Designer Outlet," Loehmann's is a leading national specialty retailer, offering well-known designer and brand name women's fashion apparel, accessories and shoes, and men's and children's apparel and furnishings at prices that are typically 30% to 65% below department store prices. For more information, please visit www.loehmanns.com.

SOURCE Loehmann's Capital Corp.