The good news is that the struggling Anaheim, Calif.-based retailer, rooted in the "action sports, fashion and music influences of California," as its marketing spiel goes, got $160 million in new loans from Wells Fargo Capital Finance and San Francisco private equity firm Golden Gate Capital.

Shares were trading at around $1.63 midday Thursday.

The debt package will help bolster the company's balance sheet, which has been hurt by the recession, and support a turnaround under Golden Gate's guidance. The new capital was part of an extensive restructuring of leases with landlords and the closure of about 175 to 200 underperforming stores over the next 14 months, the company said.

The company, better known as PacSun, was founded as a solo surf shop in Southern California in the 1980s. It sells casual apparel, accessories and footwear designed to appeal to teens and young adults. As of Wednesday, it operated 819 stores in all 50 states and Puerto Rico.

Wells Fargo is providing a five-year, $100 million revolving credit facility that replaces the existing revolver that would have expired in April 2013. The new revolver, with an interest rate of 150-200 basis points above LIBOR, is secured primarily by a first priority interest in inventory and other excess working capital. Golden Gate is investing a $60 million senior secured term loan in exchange for convertible preferred stock, giving the sponsor the right to buy up to 19.9% of common stock, or 16.7% on a fully diluted basis, at a strike price of $1.75 per share, a 33% premium over the Tuesday share price, according to the company.

The combined funds will help PacSun buy out the leases of some stores and eventually shutter about 115, leaving the company with close to 600 total locations.

"With the support from all of our major landlords, we can now focus on our targeted base of 550-600 better-performing stores and our enhanced merchandising and marketing strategies for becoming the preferred destination among teens and young adults for great style and great brands," said president and CEO Gary Schoenfeld in a statement.

Golden Gate's term loan is secured by a second lien on inventory and receivables, and a first lien in the company's remaining assets.

The bit of bad news for Pacific Sunwear, which also reported third quarter 2011 results Wednesday, is that net sales for the third quarter ended Oct. 29 continued to slide, declining about 6% to $242 million, from $257.9 million for the prior year period. Total company same-store sales slipped 3% during the period, while forecasting a fourth quarter same-store decline of 3%.

Third quarter losses also widened. On a GAAP basis, including real estate buyout costs of $1.9 million, it posted a net loss of $17.6 million, versus a $7 million loss in the corresponding period last year.

The company has been on the skids since the recession hit. While PacSun stores brought in more than $900 million in net sales during the first three quarters of 2007 and 2008, sales fell below the $800 million mark by 2009 and were at $642 million for the same period in 2011. The company has reported a net loss since 2007.

At the beginning of the three-quarter period, cash stood at $63.7 million, down from $93 million in the same period last year. By the end of the period this had dwindled to only $8.3 million, filings showed.

In 2008 the company became an acquisition target of an unlikely buyer, smaller retail chain Adrenalina, a Miami extreme sports clothing retailer. Adrenalina CEO Illa Lekach offered to buy the company for $5 a share initially, then sweetened the price 10% to about $329 million, but the company rebuffed his offer.

Wells Fargo declined comment. Golden Gate would not comment further on the transaction.

Golden Gate, with a long track record in retail turnarounds, is expected to help revitalize the company's brand. As part of the deal, Joshua Olshansky, head of Golden Gate's retail group, and Neale Attenborough, the retail group's operating partner, filled two board seats.

"These actions will immediately strengthen the company by improving its liquidity, profitability and the quality of its real estate portfolio," said Olshansky in a statement. "The initiatives announced today give the company and its new management team time and significant additional resources to execute on and accelerate its turnaround plan."

Boston-based Adage Capital Partners LP holds 15.1% of common stock in the company. Barclays Global Investors of San Francisco holds 6.8%.

Among Golden Gate's retail bets is Quincy, Mass.-based women's apparel company J. Jill, for which it paid $75 million in 2009 when it acquired the retailer from Talbots Inc. It also made investments in Express Inc., Eddie Bauer Holdings Inc., Zale Corp. and California Pizza Kitchen Inc.