FAO Inc. said Tuesday it has reached a standstill agreement with its lenders not to take any action relating to its credit facility through Jan. 10.
The direct marketer and retailer warned last Tuesday that it may seek bankruptcy protection unless its bank, Wells Fargo Retail Finance LLC, relaxed borrowing restrictions (DIRECT Newsline, Dec. 17).
FAO also said it will close as many as 70 underperforming stores by the end of March. About 55 of these 70 stores are Zany Brainy outlets.
But under terms of the agreement with Wells Fargo Retail Finance LLC–the agent for banks that form the King of Prussia, PA firm’s lending group–the parties can terminate this upon three days notice.
FAO reported a loss of $23.7 million for the quarter ended Nov. 2, down from a loss of $9.9 million last year.
FAO owns and operates the renowned children’s toy retailer FAO Schwarz; cataloger The Right Start and toy retailer Zany Brainy.
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