Bidder for Eddie Bauer says it plans to stay in Bellevue, keep CEO Neil Fiske

CCMP Capital, the new would-be owner of Eddie Bauer, said it wants to take over the struggling retailer within 45 days and continue a 2-year-old turnaround effort to remake it into a serious outdoor-gear and -apparel brand.

Jonathan Lynch, a managing director at CCMP, said the plan is to operate Eddie Bauer with little or no long-term debt.

CCMP, a New York private-equity firm, intends to keep Eddie Bauer CEO Neil Fiske and has no plans for layoffs or to move its corporate headquarters, Lynch said.

Bellevue-based Eddie Bauer filed for Chapter 11 bankruptcy protection Wednesday, citing a "crushing debt burden" inherited from former parent Spiegel and the recession.

As part of the filing, Eddie Bauer said CCMP has bid $202 million in cash for its assets, although other buyers also may bid while the company is under bankruptcy court protection in Delaware.

"Unfortunately, it really lost its footing, and we believe it's in the process of regaining it," Lynch said, noting CCMP considered buying Eddie Bauer from Spiegel for an undisclosed sum in 2004. It chose not to because it believed the strategy under Spiegel was "not a winning" one, he said.

"We think it's a proven brand with a good operating model that is on the path to returning to success."

Bankruptcy rumors had been swirling as Eddie Bauer struggled with slumping sales amid the recession. It reported a loss for the first quarter of $44.5 million as sales fell 16 percent to $179.8 million.

The publicly held company had $476.1 million in assets and $426.7 million in debt at the time of the filing Wednesday.

It had been negotiating with holders of $75 million of its senior notes to convert that debt to equity but could not reach an agreement, according to the bankruptcy filing.

Eddie Bauer said all 370 of its North American stores remain open; it has asked for court approval to keep paying vendors and employees as usual.

The retailer also plans to honor customer gift cards and a "loyalty reward" program.

The company said it has a commitment from its existing lenders for so called debtor-in-possession financing of $90 million.

"Eddie Bauer is a good company with a great brand and a bad balance sheet," said Fiske, who took over the company two years ago after leading a turnaround of Ohio-based Bath & Body Works.

"This process will allow the business to emerge with far less debt, positioned for growth as the economy recovers and as our new products gain traction," he said.

Employees seemed upbeat outside the downtown Bellevue headquarters Wednesday. "Don't we look happy?" said one, laughing. "We're happy people."

CCMP hopes to complete the sale within 45 days because a quick transfer of ownership would allow Eddie Bauer to focus on the holiday-sales season and eliminate a cause for uncertainty with suppliers, Lynch said.

CCMP, which would get a breakup fee of $5.25 million if the deal does not go through, specializes in buyouts and growth-equity investments. Its other retail investments include Cabela's, Guitar Center, 1-800-flowers.com and Quiznos.

Eddie Bauer said it has been trying to cut costs and preserve cash as part of a turnaround effort it believes is working, despite the recession.

Its bankruptcy filing mentions a new mountaineering line called First Ascent, which will hit 180 stores this fall.

In January, 71 Bellevue jobs were eliminated, leaving about 390 employees, a company executive said at the time. All told, 7,700 people are employed in the United States and 933 in Canada.

Founder Eddie Bauer opened the company in 1920 in Seattle, eventually becoming known for down jackets, mountaineering parkas and expedition gear.

After Bauer retired, the company shifted more toward casual apparel and was bought by General Mills in 1971, then by Spiegel in 1988.

Spiegel filed for Chapter 11 bankruptcy protection in 2003 and most of its assets were sold. The remainder of the company was reorganized in 2005 as Eddie Bauer Holdings.

In 2007, Eddie Bauer had a deal to be bought by private-equity firms Sun Capital Partners and Golden Gate Capital for $285 million, but shareholders rejected it and then-CEO Fabian Månsson quit.

"Eddie Bauer really has a brand, and the company has been run by Neil Fiske, who is a known retail-turnaround person," said Renee Fellman, a business-turnaround expert in Portland.

"That gives me hope that things will work out well," Fellman said.

Dick Outcalt, a principal of Outcalt & Johnson: Retail Strategists in Seattle, said the bankruptcy presents a "wonderful opportunity," because it would allow Eddie Bauer to get out of its store leases in Southern states and focus entirely on "northern climes."

"They've tried to be all things to all people," Outcalt said. "They need to be more narrow in their merchandise mix."

Lynch suggested that CCMP will reevaluate its strategy on a store-by-store basis, although he provided few details.

"There are many examples of stores that don't represent what you'd find in Seattle or Minnesota or Canada, but they do fine, so it's really a case-by-case basis," Lynch said.

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

The Associated Press and Seattle Times staff reporter Lindsay Toler contributed to this report.