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UPDATE 1-Loehmann's in debt standstill until Nov. 19

By Caroline Humer NEW YORK, Nov 12 (Reuters) - Loehmann's and its largest lenders have a standstill agreement through Nov. 19, giving the company more time to arrange a restructuring or a bankruptcy filing, according to a copy of a letter the off-price retailer sent to its vendors. According to the letter obtained by Reuters, Loehmann's made so-called forbearance agreements with commercial finance company Crystal Financial and its two largest secured noteholders representing about 70 percent of its notes. A Loehmann's spokeswoman confirmed the details of the letter. Loehmann's, which opened in Brooklyn in 1921, sells designer brands at steep discounts. It has been unable to meet its debt load even as competitors such as TJX Cos and Ross Stores have reported robust sales. Loehmann's is owned by Dubai investment group Istithmar, a unit of Dubai World. Under the agreement, the lenders agreed not to exercise or enforce any of their rights against the company through Nov. 19, meaning they will not start pushing to seize assets or force the company into bankruptcy. Loehmann's has a credit line for working capital with Crystal Financial. The agreements allow Loehmann's more time to discuss its restructuring alternatives, including a possible prearranged Chapter 11 reorganization, the letter said. The letter was sent after the company failed in late October to exchange its notes expiring next year for those with later maturity dates. The company said at that time it would not make an Oct. 1 interest payment on those notes that it had deferred because of the exchange and would pass the 30-day grace period its lenders had allowed. (Reporting by Caroline Humer; Editing by Lisa Von Ahn) Keywords: LOEHMANNS/ (Caroline.Humer@thomsonreuters.com; Tel: 1-646-223-6181) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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