Children's Place Rallies 60%+ Intraday on $90 Million Financing Deal

PLCE rallied as much as 60.3% to an $11.40 intraday high before pulling back to change hands at $8.34 shortly after 1 p.m. ET, ahead 17.3% on the day. The stock rose on heavy volume of about 11.5 million shares vs. its 850,000 10-day average.

Children's Place rose on news that it's cut a deal for a $90 million term loan from Saudi Arabian family office Mithaq Capital, which is already the chain’s majority shareholder.

Management said the loan runs until April 16, 2027, and will accrue interest at an annual rate equal to the Secured Overnight Financing Rate ("SOFR") plus 4%. Mithaq will also defer collecting interest payments until April 30, 2025.

Children's Place said the loan offered better terms than a $130 million financing deal it had been working on with 1903P Loan Agent LLC – a loan the company no longer plans to pursue.

"We are pleased to have the continued support of our majority shareholder, and to have secured additional funding to address our liquidity needs," Sheamus Toal, PLCE's chief operating officer and chief financial officer, said in announcing the deal.

The company said it plans to use the new money to repay an existing $50 million term loan, to partly cover accounts payable balances with vendors and for other general corporate purposes.

Children's Place designs and sells children's clothing both online and at more than 500 Children's Place and Gymboree stores in North America.

However, the stock has been struggling since the chain issued a profit warning in February, and has been on a long-term decline for years. Even with Wednesday's rally, PLCE has lost 94.8% of its value since peaking at $161.65 intraday in January 2018.