Part Owner of Wet Seal Gets Court Protection
Toronto-based Dylex Ltd., which owns about 30% of the stock of Irvine’s Wet Seal Inc., said Wednesday it has obtained an order from an Ontario court for protection from its creditors.
Canada’s largest clothing retailer said that the step, which is akin to a Chapter 11 bankruptcy filing in the United States, does not include Wet Seal.
Dylex said last week that it is “open” to selling its stake in Wet Seal, a women’s apparel retailer. But it was unclear Wednesday how the bankruptcy-protection order might affect any such divestiture of stock.
Dylex officials could not be reached Wednesday, and Wet Seal would not comment.
Eric Appell, an analyst at the brokerage Torrey Pines Securities in San Diego, said Dylex’s latest move does not present a threat to Wet Seal. Appell noted that Dylex, which owns 4 million shares of Wet Seal, could not readily liquidate such a large amount of stock anyway. And the Canadian court order, he said, might actually lend more stability to Dylex’s holdings.
“Wet Seal has a tremendous balance sheet,” Appell said.
Wet Seal’s stock, traded on Nasdaq, was unchanged Wednesday at $3.875 a share. The stock had climbed above $5 in late November on a favorable review by an analyst, but like other clothing retailers, it has seen its shares languish in recent weeks.