As it seeks to find firmer footing, Joann has entered a Transaction Support Agreement (TSA) with a majority of its financial stakeholders and other parties that includes commitments for approximately $132 million in new financing.
The 800+-store crafts retailer has initiated voluntary prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware and is aiming to reduce funded debt on its balance sheet by approximately $505 million. Joann expects to expedite the recapitalization process, potentially completing it as soon as late April 2024.
After it emerges from Chapter 11 protection, Joann plans to go private. Additionally, all parties have agreed to a six-month extension of Joann’s existing ABL (asset-based lending) and FILO (first in, last out) credit facilities when the court-supervised process is completed. Under the TSA, financial obligations to employees, vendors, landlords and creditors will be paid and honored in the ordinary course of business.
In early 2023, Joann was pursuing $200 million in annual cost reductions, part of a plan that was scheduled to come to fruition by early fiscal 2025.
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“Over the past several months, Joann has made meaningful business improvements through the execution of our Focus, Simplify and Grow cost reduction initiative,” said Chris DiTullio, Chief Customer Officer and co-lead of the Interim Office of the CEO in a statement. “We are excited by our progress on both top- and bottom-line initiatives in the past year and are confident the steps we are taking will allow Joann to drive long-term growth.”
Joann has created a site that provides more detailed information about the ongoing restructuring process.
