Struggling teen apparel retailer Pacific Sunwear of California Inc. filed for Chapter 11 bankruptcy protection on Thursday, succumbing to mounting losses and intense competition in the industry.
The company's shares fell as much 42 percent to a record low of 5 cents in early morning trading.
Private investment firm Golden Gate, which plans to take PacSun private after it emerges from bankruptcy, will convert more than 65 percent of its debt into equity and provide a minimum of $20 million in additional capital, the company said on Thursday.
Golden Gate had lent PacSun about $60 million in 2011.
The Anaheim, Calif.-based retailer listed assets in the range of $50 million to $100 million, and liabilities of between $100 million and $500 million, according to a court filing.
PacSun listed sportswear maker Nike Inc. and mall operator Simon Property Group Inc. among its top creditors, to which it owes $5.7 million and $3.8 million, respectively.
The company also said it had a debtor-in-possession credit agreement of $100 million with Wells Fargo Bank.
PacSun's top investors include investment firm GI2 Ltd., which owns a 28.6 percent stake, and Adage Capital Management LP with a 14.1 percent stake.
PacSun said it would continue to operate all of its 600 stores and does not expect the bankruptcy filing to have an immediate impact on employees.
In a separate filing, subsidiary Pacific Sunwear Stores Corp. listed assets of $100 million to $500 million and liabilities of $100 million to $500 million.
PacSun, which retails the Kendall and Kylie Jenner clothing line, has been able to report a profit only once in the past six quarters as intense competition from fast-fashion retailers and online rivals has led to slower sales growth.
Rival Aeropostale said in March it was exploring strategic alternatives, including a sale.
PacSun said fourth-quarter sales rose 0.5 percent to $232.9 million.
The case is in the United States Bankruptcy court, District of Delaware, Case No.: 16-10882.
The stock had fallen 96.6 percent in the past 12 months as of Wednesday's close.
(Reporting by Yashaswini Swamynathan and Ramkumar Iyer in Bengaluru; Editing by Sunil Nair and Anupama Dwivedi)