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BELLEVUE, WA-Locally based retailer Eddie Bauer Holdings Inc. said Wednesday that it has filed for protection from creditors under Ch. 11 of the US Bankruptcy Code and has tentatively agreed to sell the business for $202 million to an affiliate of CCMP Capital Advisors LLC. The sale is open to other bidders, according to bankruptcy laws.

Eddie Bauer has 371 stores nationwide, with 8,600 employees. CCMP Capital, a global private equity firm with retail experience, intends to operate the business as a going concern. As part of the tentative deal, CCMP has agreed to keep the majority of the stores open and retain a majority of the employees; support EBHI motions to maintain critical vendor relationships and payments, and; support EBHI motions to honor gift cards and its loyalty reward program.

EBHI currently anticipates completing the sale process in 60 days or less. Meantime, EBHI says all of the Company’s operations, including its 371 stores, catalog operations and its online sites are open and serving customers.

“Eddie Bauer is a good company with a great brand and a bad balance sheet,” EBHI president and chief executive Neil Fiske says in a prepared statement. “This process will allow the business to emerge with far less debt, positioned for growth as the economy recovers and as our new products gain traction.”

Eddie Bauer emerged from its first Chapter 11 bankruptcy in 2005 after being spun off from former owner Spiegel Catalog, which itself sought bankruptcy protection in 2003.

Fiske states that while the company has made good progress on its turnaround strategy for the business, the “crushing debt burden placed on the Company from the Spiegel reorganization in 2005, combined with the severe, prolonged recession, have left us with no choice but to use this process to reduce the debt load on the business.”

Fiske says EBHI has secured a commitment from its existing revolving credit lenders–Bank of America, NA, GE Capital Corp. and CIT Group/Business Credit Inc.–for so-called Debtor-in-Possession financing of $90 million on an interim basis and $100 million based on final court order, which it believes will provide ample liquidity to meet its ongoing obligations during the sale process.

Eddie Bauer opened 11 stores and closed 24 in 2008. In March 2009, the company reported a $127.5-million ($4.13 per share) loss in the final three months of 2008 due to $144.6 million in impairment charges and the overall decline in consumer spending. It also stated that was in talks to amend a $225 million term loan it said it was at “significant risk” of violating. If it could not, Fiske said the company’s independent accountant likely would question the company’s ability to continue as a going concern.

Eddie Bauer moved into its 230,000-square-foot leased corporate headquarters in mid-2007. Its lease has a term of 15 years. It’s retail and outlet stores also are leased, and are generally located in regional malls. Its retail stores average approximately 6,400 gross square feet, while its outlet stores average approximately 7,300 gross square feet.

In most cases, its retail store leases have ten-year terms and its outlet store leases have five-year terms, with one five-year option to renew. The majority of its store leases normally provide for base rent and the payment of a percentage of sales as additional rent when certain sales thresholds are reached. Approximately 12% of its retail store leases allow it the one-time right to terminate the lease three- to five years after the commencement of the lease if previously agreed upon sales thresholds are not achieved.

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