Off-price retailer Gabe’s has closed a strategic transaction with its lenders to convert existing debt into equity, a move that helps the company avoid bankruptcy.

Existing term lenders, namely Brigade Capital Management, Arbour Lane Capital Management, and Anchorage Capital Advisors, have agreed to convert more than 75 per cent of Gabe’s outstanding term loan obligations into equity. 

As a result, the lenders assume full ownership of the company from its previous owner – private equity firm Warburg Pincus.

Additionally, the company has secured a capital infusion to support go-forward operations and strengthen relationships with vendor partners. Second Avenue Capital Partners and Ares Credit funds will continue to provide an asset-based loan facility.

Gabe’s has also reached mutually beneficial agreements with more than 1000 vendor partners and completed negotiations with many of its landlords to support long-term growth.

“With a stronger balance sheet, renewed vendor relationships, and more efficient operations, Gabe’s is poised for success and to continue providing customers with the brands they want at prices they love,” said Gabe’s CEO Jason Mazzola.

“We are confident in Gabe’s go-forward plan and look forward to working with the leadership team to advance its status as a leading off-price retailer and unlock the Company’s full potential,” added Patrick Robb on behalf of the new majority owners. 

Founded in 1961 in Morgantown, West Virginia, Gabe’s offers brand names and fashion at savings of up to 70 per cent off across its store network in 20 states.