Leslie’s has entered into a restructuring support agreement with a group representing more than 80% of its existing lenders and filed for Chapter 11 bankruptcy protection as the pool and spa retailer seeks to substantially reduce its debt and strengthen its financial position.
The restructuring is expected to eliminate approximately $685 million, or 90%, of Leslie’s outstanding funded debt.
The agreement also includes commitments for $150 million of new capital, consisting of $90 million of new-money debtor-in-possession financing and $60 million of equity financing. Certain parties to the restructuring agreement fully backstop the equity investment.
Leslie’s has filed voluntary petitions for prearranged Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas.
The company expects to emerge from Chapter 11 in early 2027 and anticipates that a group of its existing lenders will hold majority ownership following the restructuring.
Leslie’s said the transaction is intended to provide a deleveraged balance sheet, additional liquidity and greater financial flexibility to reinvest in its operations and customer experience.
The company is also reducing its physical retail footprint. Leslie’s announced the closure of 76 stores and said all remaining locations outside of stores that were recently closed will remain open and operational.
The retailer plans to continue evaluating its real estate portfolio during the Chapter 11 process to better align its store network with customer demand and its long-term business strategy.
Leslie’s said stores and digital operations will continue serving customers throughout the restructuring. The company is seeking court authorization to continue paying employee wages and benefits, maintain customer programs and honor vendor obligations.
Gift cards and loyalty program benefits will continue to be honored.
In addition to the $90 million new-money DIP facility, Leslie’s is seeking approval for a fully committed $225 million DIP asset-based financing facility from its existing ABL lenders.
The company said the financing arrangements are expected to provide sufficient liquidity to operate through the Chapter 11 process.
Support: Simpson Thacher & Bartlett and Haynes and Boone are serving as legal advisers. BRG is serving as financial and restructuring adviser, Centerview Partners is serving as investment banker and C Street Advisory Group is serving as strategic communications adviser. Hilco Global has been retained to assist Leslie’s with its real estate portfolio.
KEY QUOTES:
“Today’s announcement marks an important milestone in our commitment to our customers and our business. With a stronger balance sheet and greater financial flexibility, Leslie’s can reinvest across the business to strengthen operating execution and deliver an even better experience for our customers, both in-store and online. Leslie’s is here to stay, and I am deeply grateful to our employees, customers, and partners for their continued support as we work to position Leslie’s for a strong future.”
Jason McDonell, Chief Executive Officer of Leslie’s
