HINGHAM, Mass. (

TheStreet

) --

Talbot's

(TLB)

is soaring after the women's apparel retailer finally provided investors with some answers to its debt woes.

The company announced today that it will buy

BPW Acquisition

( BPW), a special purpose acquisition company, for $11.25 a share in Talbots' common shares.

This move will allow Talbots to use BPW's cash-in-trust of about $350 million, as well as additional financing it obtained, to retire all of its existing debt and to buy the outstanding shares of its stock held by majority owner

Aeon

.

After the acquisition is completed, BPW will own about 60% to 69% of Talbots' common stocks and Aeon will hold no Talbots debt or equity.

Talbots also obtained a new $200 million senior secured revolving credit facility from GE Capital. Proceeds of this new facility will be used to fund the transactions and for ongoing working capital needs.

Separately, the company also said it swung into a profit of $14.6 million, or 27 cents a share, in the third quarter, compared with a loss of $170.8 million, or $3.19 in the year-ago period.

Excluding items, Talbots said it would have earned 31 cents a share, significantly higher than the loss of 14 cents analysts forecast.

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Sales decreased 13.5% to $308.9 million from $357.3 million last year, while same-store sales tumbled 15.9%. Talbots attributed the decline to reduced markdowns from last year.

Looking ahead, the retailer expects a fourth-quarter loss in the range of 6 cents to 14 cents a share. Wall Street predicts a loss of 52 cents a share.

Shares of Talbots are spiking 20.1% to $8.66 in morning trading.

Rival

AnnTaylor Stores

(ANN)

also moved out of the red in its third quarter, while

New York & Company

(NWY)

narrowed its loss.

-- Reported by Jeanine Poggi in New York.

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