Case Study

Laura’s Shoppe $31 Million Senior-Secured Credit (DIP) Facility. Here's what we saw.
Laura’s Shoppe Canada (Laura) is a leading Canadian retailer of women’s apparel and accessories with a loyal client base and an untapped online growth opportunity. Others didn’t see it. We did.

Transaction Overview

Third Eye Capital provided Laura with super-priority secured debtor-in-possession (DIP) financing when the company’s previous senior lender forced a court-sanctioned restructuring process. In order to execute an operational turnaround, Laura needed a transitional debt facility from a lender who would not only support its plans but also help advocate it to various skeptical stakeholders.

Opportunity

Based in Laval, Quebec, Laura is a leading retailer of women’s apparel and accessories with close to 150 stores across Canada. Laura provides women aged 40 years and over with reliable and fashionable office and casual wear through a personalized shopping experience. Family-owned and operated since 1930, Laura has an established clientele that likes to coordinate style with comfort and remain on trend. In 2011, Laura shifted suppliers and changed its merchandising and purchasing strategy to broaden its target market. However, this disappointed the retailer’s core customers and profitability was significantly impacted. Laura re-grouped and embarked on a difficult operational restructuring that lost the confidence of its senior lenders, who hastily wanted to liquidate the business. Laura needed a financing partner that could help execute its turnaround plan of improving cash flows through cost reductions, inventory rationalizations, and landlord negotiations. It also need capital to revitalize its stores and invest in an omni-channel strategy to create a robust online store. We saw a company with a core customer base motivated to buy from Laura and a dedicated and experienced management team with a plan to restore the confidence of its customers and its creditors. Laura needed an entrepreneurial lender to help keep the operational plan on track, and Third Eye Capital was perfectly suited for the job.

Approach & Outcome

We took a hands on approach and identified a viable turnaround opportunity in a challenging retail environment where others only saw risks. We underwrote a plan to change inventory mix, streamline SKUs, reduce stores, cut costs including rent, centralize purchasing, negotiate with creditors. We tracked the data that mattered and closely monitored the indicators that would determine if Laura could once again become a profitable player in the Canadian retail industry. We assess transactions from the perspective of the business owner, and match our capital to not just business need but also asset value potential.

Our financing solution enabled Laura to execute its plan, maximize working capital, and provide benefits to all its stakeholders. Laura eventually refinanced us through a traditional lender after we helped eliminate the uncertainty that almost led to the company’s demise. We saw so Laura could rise again.

"We met Third Eye Capital at a most challenging and tumultuous time for both our business in particular and our industry in general, requiring a swift and comprehensive refinancing, and following a period of disappointing results. We closed quickly, enjoyed a very good working relationship with TEC, and refinanced one year later with a major Canadian bank. Having borrowed previously from major Canadian banks as well as an alternative lender, we found TEC to stand out as being entrepreneurial, professional, supportive, practical, intuitive and insightful."

Josh Fisher, Senior Vice-President