March 28, 2018 / 5:32 PM / 22 days ago

David's Bridal in talks to tap Evercore for debt restructuring: sources

(Reuters) - David’s Bridal Inc is in talks to hire investment bank Evercore Inc as a restructuring advisor to slash its $1 billion debt burden, as the U.S. wedding gown retailer faces mounting competition, people familiar with the matter said on Wednesday.

David’s Bridal is the latest retailer to struggle as internet upstarts offer increased transparency on prices, turning its stores into showrooms where customers come to try on gowns only to buy them online. More than 15 U.S. brick-and-mortar retailers filed for bankruptcy last year.

David’s Bridal, which is known for its affordable wedding gowns and bridesmaid dresses and has over 300 U.S. stores, has also suffered due to declining marriage rates, according to credit ratings agency Standard & Poors Financial Services LLC.

One strategy the retailer may pursue to trim its debt is to ask lenders to give it at least another year, until 2020, to turn around its business before repaying an approximately $500 million loan, the sources said.

David’s Bridal, based in Conshohocken, Pennsylvania, did not immediately respond for comment. Evercore and Clayton, Dubilier & Rice LLC, the private equity firm that owns David’s Bridal, declined to comment.

David’s Bridal is also liable for $270 million in bonds coming due in 2020. The bonds are trading significantly below face value at around 53 cents on the dollar, according to Thomson Reuters data, indicating investor concerns about repayment.

David’s Bridal’s term loan is quoted below full value on the secondary market, at about 86 cents on the dollar, according to Thomson Reuters data.

Much of the retailer’s debt stems from Clayton, Dubilier & Rice’s leveraged buyout of David’s Bridal in 2012, a deal that was valued at about $1.05 billion.

Thomson Reuters Loan Pricing Corp reported last year that a group of lenders to David’s Bridal had tapped Rothschild as an investment banker to prepare for a possible debt restructuring.

The retailer also has 11 stores in Canada and four in the United Kingdom. Some of its offerings include wedding gowns by designers Vera Wang and Oleg Cassini for less than $2,000, flower girl dresses and bridal accessories including tiaras and veils.

Alfred Angelo Bridal, a retailer and maker of wedding gowns, filed for bankruptcy last year, leaving some brides without their dresses. At the time, David’s Bridal offered brides-to-be a discount on replacement dresses.

Reporting by Andrew Berlin and Jessica DiNapoli in New York; Editing by Frances Kerry

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