Wet Seal Inc.’s comeback bid got some financial backing.
The teen retailer said late Tuesday that it closed its $31 million stock sale. Wet Seal sold a combination of 8.2 million preferred shares, 3.4 million common shares and warrants for up to 7.5 million shares.
Wet Seal said it paid off a $12 million bridge loan plus interest. The remaining funds,about $18 million,will be used for “general working capital purposes,” the company said in a release.
Late last month, the company said it plans to refile its annual report for the 12 months ended Jan. 31, 2004 and its quarterly reports for the first three quarters of the year ended Jan. 29, 2005. Wet Seal said its method of accounting for tenant improvement allowances and rent holidays doesn’t agree with accounting guidelines.
The company also plans to restate its income taxes for the second and third quarters of the year ended Jan. 29, 2005.
The apparel chain got a boost in March, reporting a 36% jump in sales at stores open at least a year.
The gain came after a big cost-cutting effort that saw it close about 160 unprofitable stores. It now has 307 Wet Seal stores and 91 Arden B. stores.
Meanwhile, Wet Seal faces a class action lawsuit that alleges the company and others violated securities law by making misleading statements and failing to disclose critical details about the company’s performance and ability to stem losses.
The complaint also charges that some former directors of Montreal’s La Senza Corp. used inside information to unfairly benefit from its sale of Wet Seal shares.
Last summer La Senza sold its 10% stake in Wet Seal. La Senza is a lingerie retail chain headed by former Wet Seal chairman Irv Teitelbaum, who stepped down last year after 20 years as chairman.
