Foothill Ranch-based Wet Seal Inc. said Friday that it’s in talks with S.A.C. Capital Associates LLC and others to extend a $10 million bridge loan.
The loan is set to expire Feb. 28. The struggling retailer hopes to extend the loan to March 31, then renew it month-to-month until the lenders choose to close it.
The company said that if the bridge loan isn’t paid back by the end of July, the base interest rate will rise from 25% to 30%, according to the negotiations.
Wet Seal said there’s no assurance that the talks will result in an extension of the bridge loan.
Meanwhile, Wet Seal shareholders are set to vote on a $56 million convertible note and warrant financing plan on Monday.
Wet Seal said the bridge loan extension would allow it to have additional capital available after the closing of its convertible financing. The retailer said it expects to close the refinancing next week, assuming shareholders approve it.
Wet Seal is in the process of shuttering 150 stores by the end of February. The company operates 463 Wet Seal stores and 96 Arden B. stores.
It has about 5,000 workers, but said 2,000 employees would be cut in the store liquidations.
