NEW YORK ( TheStreet) -- Shares of Pacific Sunwear of California (PSUN - Get Report) surged in late trades on Wednesday after the Anaheim, Calif.-based specialty retailer unveiled a dramatic restructuring plan that calls for the closure of 175-200 underperforming stores over the next 14 months.
The company also said it's secured a five-year $60 million term loan from private equity firm Golden Gate Capital, and that it's completed a five-year $100 million revolving credit line with Wells Fargo Capital Finance.
"The combination of these transactions greatly enhances our financial and operating position, and is another critical step forward as we work to re-establish PacSun as a leading specialty retailer across the U.S.," said Gary Schoenfeld, the company's president and CEO, in a statement. "With the support from all of our major landlords, we can now focus on our targeted base of 550-600 better performing stores and our enhanced merchandising and marketing strategies for becoming the preferred destination among teens and young adults for great style and great brands."
The stock was last quoted at $1.85, up 37%, on volume of nearly 150,000, according to Nasdaq.com. Based on Wednesday's regular session closing price of $1.35, the shares were down about 75% so far in 2011.In order to facilitate the closing of the underperforming stores, Pacific Sunwear has reached a number of deals with its landlords, including buying out 75 leases for $13 million, agreeing to short-term extensions for 50 better performing stores, and terminating the leases of 115 stores upon expiration by the end of fiscal 2012. Pacific Sunwear said Golden Gate is being issued convertible preferred stock that gives it the right to purchase up to 19.9% of the company's stock for $1.75 per share. The company also reported a non-GAAP loss of $7.1 million, or 10 cents a share, for its fiscal third quarter on sales of $242 million, and said it expects a non-GAAP loss of 18 to 27 cents a share for its fiscal fourth quarter.