Shares of Ascena Retail Group (ASNA) - Get Report, parent company of Ann Taylor and Loft, jumped Wednesday afternoon following a report that private equity firm Sycamore Partners is finalizing a plan to purchase the bankrupt company's assets.
The stock shot up as much as 17% before falling back to a 4.4% gain Wednesday following the Bloomberg report.
Sycamore is offering to buy Ascena's assets, including the Ann Taylor and Loft retail brands, before the company asks for court permission to confirm its bankruptcy plan.
Talks are ongoing as the two sides negotiate over price, Bloomberg reported, citing unnamed sources.
Ascena filed for voluntary bankruptcy in July, becoming the largest retail operator at the time to crumble under the weight of the coronavirus pandemic.
Ann Taylor, Loft, Lane Bryant and its other brands have been operating through Ascena's restructuring with about 95% of stores open.
The Mahwah, N.J.-based company also owns operates Lou & Grey, Catherines and Justice store brands. However, Ascena said it would be closing a "significant" number of Justice stores as well as certain Ann Taylor, Loft, Lane Bryant and Lou & Grey stores.
At the time of its filing, the company said it expects to reduce debt by about $1 billion in its pre-arranged restructuring. Ascena had $150 million in funding from its existing lenders.
On Wall Street Wednesday, stocks were mostly lower, a day after the Dow Jones Industrial Average and S&P 500 close at record highs, and ahead of Thursday's Thanksgiving holiday. On Friday, the New York Stock Exchange and Nasdaq will close at 1 p.m. Eastern. The Securities Industry and Financial Markets Association recommends that bond markets close Thanksgiving and halt trading at 2 p.m. Eastern on Black Friday.