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Eddie Bauer files for Chapter 11 cover again

OUTDOOR apparel retailer Eddie Bauer Holdings Inc filed for bankruptcy for the second time in six years and said it would seek court approval to sell its assets to private equity firm CCMP Capital for US$202 million.

The company, which also sought relief under Canada's bankruptcy laws, filed for Chapter 11 protection in the United States Bankruptcy Court in Delaware.

CCMP is the "stalking horse" bidder, which submits a starting bid to set a floor under other possible offers.

CCMP Managing Director Jonathan Lynch said Eddie Bauer was in the classic "good company, bad balance sheet" situation.

He said CCMP was attracted to the strength of Eddie Bauer's brand and its ability to sell its products through various channels, such as on the Internet, by mail order and in stores.

"We view Eddie Bauer as a legendary brand," Lynch said in an interview with Reuters. "What you need to do is fix the balance sheet in a way that allows this company to reach its full potential."

Eddie Bauer, which started as a sport shop in 1920 in Seattle, expects that the sale would transform the business "into a financially stronger entity with substantially less debt and a better position for the future," the company said in a statement.

It also said CCMP planned to keep most stores open.

Retailers have struggled in the US recession.

Recent retail bankruptcies have included apparel retailer Filene's Basement and jewelry and housewares chain Fortunoff.

"The retail environment is a function of the overall economy and people are spending less and making smarter choices. The question is, do they need an Eddie Bauer?" said James Bromley, a partner in the restructuring group for law firm Cleary Gottlieb.

Eddie Bauer said it had secured US$100 million in "debtor-in-possession" bankruptcy financing from a group led by Bank of America Corp and CIT Group Inc as it reorganizes.

It anticipates its sale will be completed within 60 days.


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