The Children’s Place (NASDAQ:PLCE) shares jumped 31% premarket on Thursday after the children’s apparel retailer secured a $78.6M interest-free financing from its majority shareholder Mithaq Capital.
The funds will be used to support operations, including vendor and service provider payments, as the retailer works to improve its liquidity position and strengthen its balance sheet.
Pursuant to the financing deal, Mithaq provided an initial tranche of $30M to the company on February 29, 2024, in the form of an interest-free, unsecured, and subordinated term loan. An additional $48.6M term loan will be issued on or before March 29, 2024, subject to certain conditions.
The Children’s Place (PLCE) also announced the appointment of four persons nominated by Mithaq to its board of directors, with Mithaq CEO Turki Saleh A. AlRajhi named chairman-elect during the transition period.
Upon funding of the second loan, at least four of the remaining non-Mithaq appointed directors will resign and directors appointed by Mithaq will comprise a majority of the company board.
The Children’s Place (PLCE) expects to close the previously announced $130M term loan in March 2024 and is continuing to pursue alternative financing on terms no less favorable in the aggregate to the company.
