Eddie Bauer trying to renegotiate loans to stay afloat

Bellevue-based retailer Eddie Bauer said it is trying to change a $225 million term loan so that it can avoid a "going concern" opinion from its accountants.

The company also said its fourth-quarter loss widened because of large impairment charges and a "swift and dramatic downturn in the economy."

For the three months ending Jan. 3, Eddie Bauer posted a loss of $127.5 million, or $4.13 a share, significantly worse than its year-ago loss of $18.2 million, or 59 cents a share.

Sales dropped 6 percent to $369.9 million. Sales at stores open at least a year declined 5.7 percent.

Chief Executive Neil Fiske said the company was hurt by a pullback in consumer spending and a highly promotional retail environment. The fourth-quarter loss included impairment charges totaling $144.6 million.

Meanwhile, the company said it is at risk of violating the consolidated secured leverage ratio on its term loan. It is in talks with its lenders to change the agreement "in order to avoid a potential going concern opinion" — a reference to its ability to continue to operate indefinitely.

The company said proposed changes include upfront cash, a substantial increase in interest rates and warrants for the company's common stock.

"We expect 2009 to be a very challenging, difficult year," Fiske said in a statement. "While the amendment we are seeking is expensive, it will give us a new level of covenants with considerably more room on the downside through the first quarter of 2010."

Citing the ongoing discussions, the company said it asked for a 15-day extension on the deadline for filing its annual report.

Shares of Eddie Bauer lost nearly half their value today, falling 36 cents, or 46 percent, to 42 cents.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com