Eddie Bauer Holdings (fka EBHIQ)

[Trops]

Buyout coming IMO:Wall Street Journal Article tonight By ELIZABETH HOLMES and PETER LATTMAN
Eddie Bauer Holdings Inc. reported its ninth consecutive quarter of losses on Thursday as talks with lenders on converting some of its debt to equity continued.

The Bellevue, Wash., retailer is "in intense discussions," with those lenders, Neil Fiske, president and chief executive officer, said in an interview. The company has until July 1 to convert that debt or face stiff penalties. He described the talks as "challenging."

Eddie Bauer, which operates 364 stores in the U.S. and Canada, also has held talks recently with potential buyers according to a person familiar with the matter. The company has hired Peter J. Solomon Co. as its investment banker to negotiate any sale, according to people familiar with the matter.

Mr. Fiske declined to comment.

Parties interested in Eddie Bauer include Gordon Brothers Group and Hilco Consumer Capital LLC, according to that person. Bloomberg News earlier reported on the talks.

A third potential bidder is Hudson Capital Partners LLC. "It is the kind of opportunity we would be very interested in," says David Peress, Hudson's chief investment officer. He declined to comment further.

The company has less than seven weeks remaining on the deadline for its debt talks. Earlier this year, it renegotiated a term-loan to obtain covenant relief. Its executives wanted more time to persuade the holders of $75 million in convertible notes to turn their debt into equity, or find new capital to pay down the debt.

"We do not yet have a solution," Mr. Fiske said. The company's "preferred first step" is to convert the notes into shares, but there are continuing disagreements over how many shares they should receive, and at what price, he said.

Eddie Bauer also has hired law firm Latham & Watkins LLP as advisers, according to two people familiar with the matter. Mr. Fiske declined to comment.

Eddie Bauer reported its first-quarter loss widened to $44.5 million as revenue fell 16% to $179.8 million. It is in the middle of a product strategy shift, to outdoor apparel and gear from women's casual apparel. The first efforts of that makeover will appear in stores this fall