Le Chateau asks founder for another loan this one for 15 million

MONTREAL — Le Chateau is once again turning to its founder to finance the fashion retailer’s operations and store renovations.

Instead of tapping banks, Herschel Segal is providing a $15-million loan on top of the $10 million the majority shareholder forked over previously.

The loans are secured by the company’s property and rank only behind its $800-million revolving credit facility. They will earn the lesser of double the Royal Bank’s prime rate or 7.5 per cent.

The 55-year-old Montreal-based company has repeatedly turned to Segal and his wife, Jane Silverstone Segal, who replaced him as chairman and CEO, for financial support.

Industry experts say companies only turn to their owners for funding if the investor can earn greater returns than other investments or as a last resort. Segal is also a leading investor of David’s Tea, which recently went public.

Le Chateau didn’t return immediately requests for comment.

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