Benzinga | Sep 1, 2020 08:09AM EDT

J.Jill Announces Transaction Support Agreement That Would Result In A Waiver Of Any Past Non-compliance With The Terms Of The Company's Credit Facilities

- Term loan lenders holding greater than 70.0% of the outstanding principal amount under our term loan facility and shareholders holding a majority of the equity of the company support the financial restructuring transaction

- The company is working actively with the term loan lenders to obtain the necessary consents to implement the transaction

- All non-compliance with the terms of the company's credit facilities would be waived in connection with the transaction

- Transaction would provide the company with additional liquidity

- J.Jill plans to meet its obligations to its vendors in full

J.Jill, Inc. (NYSE JILL) ("the Company"), today announced that with the support of a majority of the Company's shareholders, it has entered into a Transaction Support Agreement ("TSA") with lenders holding greater than 70.0% of the Company's term loans ("Consenting Lenders") on the principal terms of a financial restructuring ("Transaction") that would result in a waiver of any past non-compliance with the terms of the Company's credit facilities and provide the company with additional liquidity.

If the Transaction is consented to by the requisite term loan lenders, the Transaction will be consummated on an out-of-court basis. The out-of-court Transaction would extend the maturity of certain participating debt by 2 years, through May 2024, enabling the Company to strengthen its balance sheet and better position itself for long-term growth. The Company is working actively with the Consenting Lenders to obtain the necessary consents.

In the event that the Transaction does not receive the required consents, the parties to the TSA have agreed to a prepackaged plan of reorganization under Chapter 11 of the United States Code (the "In-Court Transaction") the key terms of which have been negotiated, including additional financing during the Chapter 11 process. While the Company hopes to receive the required consents to execute the out-of-court Transaction, the Company anticipates that the In-Court Transaction would be a swift process in which all vendor claims would be unimpaired and paid in full, and from which the Company would emerge with a strong and healthy balance sheet.

"J.Jill has been buoyed by a strong direct business and a loyal customer base, and the transaction proposed in this agreement will enable our company to emerge from this challenging stretch in a position of strength," said Jim Scully, Interim Chief Executive Officer of J.Jill. "I am grateful for the confidence and support of many of our lenders and shareholders as we work together to advance the best interests of our employees, vendors and customers and position our company for long-term success."

Key Terms

The out-of-court Transaction contemplated by the TSA will, among other things:

* extend the maturity of certain participating debt to May 2024,

* waive all existing non-compliance with the terms of the Company's credit facilities,

* grant a financial covenant holiday until Q4 2021, and

* provide for a new money investment of no less than $15mm in the form of a junior term loan facility.

If the Transaction does not receive the required consents for the out-of-court Transaction (or the Company does not meet the other conditions to closing the out-of-court Transaction), the TSA provides that the Company will pivot to the In-Court Transaction, which will, among other things, provide for:

* a new money investment of up to $75mm in the form of a debtor-in-possession facility, and

* the conversion of the debtor-in-possession facility into a new term loan facility that matures 5 years after emergence.

Conditions to Closing

The closing of the out-of-court Transaction is conditioned on the satisfaction or waiver of certain conditions precedent, including finalizing all definitive documents and achieving certain participation thresholds. Specifically, the Transaction requires participation by lenders holding at least 95% of the outstanding principal amount of the Company's term loans by September 11, 2020 (as such date and consent threshold may be modified as provided in the TSA).

Additional information regarding the TSA, including certain conditions to the consummation of the TSA, will be disclosed in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission and available on www.sec.gov.

Kirkland & Ellis LLP is serving as legal counsel to the Company, Centerview Partners is serving as the Company's financial advisor and investment banker, and AlixPartners is serving as the Company's restructuring advisor.