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Coldwater Creek gets infusion of cash

Tue., July 10, 2012

CEO says loan will help retailer meet goals

One of the country’s largest private equity firms has loaned Coldwater Creek Inc. $65 million.

Golden Gate Capital announced the five-year loan Monday at its San Francisco offices. In return, Golden Gate will place two directors on the board of the publicly traded women’s apparel retailer.

Sandpoint-based Coldwater Creek has struggled to redefine itself in a tough retail economy. After cutting costs, company officials are refining apparel lines to attract female shoppers in the over-40 category.

Dennis Pence, chairman and CEO, said the investment is an endorsement of the retailer’s turnaround plans. “It provides us with further financial flexibility to complete our near term business objectives and accelerate our growth plans,” Pence said in a news release.

The company has lost money for seven consecutive quarters.

Its stock price has declined more than 40 percent in the past three months. Coldwater Creek will close 15 retail or outlet stores this year as part of its goal to close 35 to 45 stores between 2011 and 2013.

Golden Gate Capital invests in a wide range of companies, both public and private, with a healthy interest in retail apparel; in December it invested $60 million in teen retailer Pacific Sunwear of California Inc.

In 2009 it acquired J. Jill from the Talbots company, then sold it to other investors in 2011.

In 2003 Golden Gate acquired rugged-equipment maker Itronix, one of Spokane’s best-known tech companies. It later sold it to General Dynamics, which eventually moved the Itronix operations from Spokane to Florida.

An industry ranking lists Golden Gate as the second-best private equity firm in the world. The HEC Dow Jones Private Equity Fitness Ranking lists Silver Lake as the No. 1 firm, followed by Golden Gate, which a year ago wasn’t even on the top 10 list.

Coldwater is using its assets and inventory as loan collateral. The company also issued convertible preferred stock to an affiliate of Golden Gate, which gives it the option of buying up to 19.9 percent of the company’s common stock at an exercise price of 85 cents per share.

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