JOANN Inc. Secures $132 Million in Fresh Capital Through Major Debt Restructuring Deal

JOANN Inc. (NASDAQ: JOAN), the nation’s leading retailer in sewing, fabrics, and arts and crafts supplies, has finalized a significant financial recapitalization plan with its primary lenders and industry financing partners. The arrangement includes approximately $132 million in new capital commitments, coupled with a comprehensive debt reduction strategy targeting the elimination of roughly $505 million in funded obligations from its balance sheet.

Protecting Business Continuity Amid Restructuring

A critical element of the agreement ensures complete operational continuity throughout the restructuring period. All existing obligations to employees, vendors, landlords, and trade partners will be fully honored and processed through normal business channels. The company’s 829 locations across 49 states, along with its robust JOANN.com digital platform, will maintain regular operations without interruption.

The restructuring encompasses a six-month extension of the company’s asset-based lending (ABL) and first-in-last-out (FILO) credit facilities, effective upon completion of the judicial process. Notably, approximately 95 percent of JOANN’s store portfolio currently operates on a cash flow positive basis, demonstrating underlying business resilience despite capital structure challenges.

Strategic Debt Elimination and Financial Flexibility

The $505 million debt reduction represents a transformative shift in JOANN’s financial architecture. Combined with the $132 million in new financing, this restructuring provides the company with enhanced financial flexibility and resources to maintain its competitive position in the retail arts and crafts sector.

“This agreement addresses our capital structure needs while providing the financial resources necessary to deliver quality products and enhance customer experiences across all our channels,” said Scott Sekella, Chief Financial Officer and co-leader of the Interim Office of the CEO. The company has also implemented a comprehensive cost reduction initiative focused on operational efficiency and strategic business optimization.

Accelerated Chapter 11 Process in Delaware

JOANN and certain affiliates have initiated voluntary prepackaged Chapter 11 bankruptcy cases in the U.S. Bankruptcy Court for the District of Delaware. This approach allows the company to complete the financial restructuring on an expedited timeline, with completion anticipated by late April 2024.

Following emergence from Chapter 11, JOANN will transition to private ownership held by certain lenders and industry parties, with shares no longer trading on Nasdaq or other public exchanges. The company is filing customary first-day motions to ensure uninterrupted wage payments, employee benefits continuation, and full satisfaction of vendor obligations throughout the restructuring period.

Eight Decades of Retail Leadership

Over its 80-year history, JOANN has established itself as the premier destination for sewists, quilters, crafters, and creative enthusiasts nationwide. The company continues to operate its 829-store network and digital commerce platform while maintaining its commitment to customers, team members, and supply chain partners during this strategic financial recapitalization.

Court filings and restructuring details are available through designated legal channels, with Latham & Watkins serving as primary legal counsel. The company’s investor relations team remains available to address questions regarding the transaction structure and timeline.