G+G Retail to exchange notes for equity

New York, Jan. 30 - G+G Retail Inc. said holders of more than 99% of its 11% senior notes have reached an agreement to exchange the notes for equity.

The agreement in principal is with affiliates of Pegasus Investors LP, which holds a majority of the voting common stock and preferred stock of G+G's parent G&G Retail Holdings Inc.

Under the proposed restructuring, G+G's notes and preferred stock will be exchanged for new common stock.

The New York retailer of female junior and pre-teen apparel will also obtain a new $50 million senior secured credit facility from Ableco Finance LLC to replace its existing revolving credit facility.

The transaction is expected to close by the end of March.

The complete elimination of the company's long term debt, the significant reduction of its ongoing debt service obligations and the new revolving credit facility will "greatly strengthen the company's liquidity and cash position and its ability to grow the business," Scott Galin, G+G's president and chief operating officer, said in a news release.

G+G's existing revolver is $30 million in size while the company had $107 million of the 11% notes outstanding as of Nov. 1, according to G+G's most recent 10-Q filing with the Securities and Exchange Commission.

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