Dive Brief:
- RTW Retailwinds stock stopped trading on the New York Stock Exchange this week after it failed to meet the stock market's minimum market capitalization requirements
- The retailer, which owns New York & Co., said in a securities filing that it doesn't plan on appealing the decision, as it was unable to take advantage of provisions to get back into compliance. As of Tuesday, RTW's stock trades on the OTC Pink market.
- The de-listing won't affect RTW's business operations or violate any loan terms, the company said.
Dive Insight:
RTW's de-listing is another sign of the company's deep financial woes. Its "challenging financial situation" that stems from the "significant downturn in business" made it impossible for RTW to boost its market cap back up to compliance levels.
"The Company has experienced substantial and recurring losses from operations. As such, the Company has been considering available options including restructuring its obligations or seeking protection under the bankruptcy laws," RTW said in the filing.
Also this week, RTW reported that it has entered forbearance on its credit facility with Wells Fargo following a default on its loan. As part of its agreement with Wells Fargo, RTW has to pay down the full amount outstanding on its facility by the end of August — no easy feat for a company facing deep liquidity issues.
The retailer has already said that a bankruptcy filing was "probable" to get access to additional capital, and later added that it may need to shut all of its stores. (Bloomberg reported later that a bankruptcy filing that contemplates the liquidation of RTW's physical footprint was indeed being considered at the company.) Since the COVID-19 crisis began, RTW has defaulted on leases, vendor payments and its loan with Wells Fargo. More, its CEO-elect resigned unexpectedly, along with four of its board directors.
In that light, where the company's stock is traded seems like a relatively minor problem. But it is yet another symptom of the company's struggles, and a signal to the market that they won't be resolved in the near-term.
