(Bloomberg) -- Empire Today and some of its lenders are in talks to provide the flooring company with fresh money while it looks to reduce its debt obligations.
An emerging proposal calls for below-par exchanges in which lenders could swap into a mix of senior- and junior-ranking debt, according to people with knowledge of the matter who asked not to be identified discussing a private matter. Empire’s reconfigured debt complex would include first-out, second-out and third-out term loans that set an order of repayment priority and effectively push some lenders down the line.
Those negotiating the transaction would receive better treatment than others, the people said.
Lenders also plan to provide fresh financing to help relieve liquidity concerns as Empire combats slumping sales, according to the people. They added negotiations are ongoing and no final decisions have been made.
An Empire representative declined to comment, while messages left with its private equity owner Charlesbank Capital Partners and company adviser Greenhill & Co. were not returned.
Smaller home-focused retailers have been struggling as higher interest rates curb home renovation activity. LL Flooring Holdings Inc. in September was sold while in bankruptcy, avoiding potential liquidation. Furniture retailer Conn’s Inc. entered into Chapter 11 protection back in July with plans to shut down.
Moody’s Ratings downgraded Empire by two notches to Caa3 in September, citing weak performance amid heavy competition and tight liquidity. Its $595 million first-lien term loan due in 2028 hit fresh record lows of 61 cents on the dollar this week, according to data compiled by Bloomberg, down from 76 cents in August.
Illinois-based Empire Today, known for its TV jingle, reached a deal in 2021 to be acquired by Charlesbank.
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