According to a report by the New York Post, JPMorgan Chase Co., Bank of America Corp. and Goldman Sachs Group Inc. were on a tight spot to finance the acquisition of retailer Rue 21. Formerly known as Pennsylvania Fashions Inc, the specialty discount retailer had been agreed to be purchased by private equity firm Apax Partners for USD1.1 billion.

Sources told The Post the three banks would take responsibility of the financial commitments they had made to back the buyout. The potential losses amounted to tens of millions of dollars, the sources said. 

The banks initially agreed to finance the buyout with a debt and loans package amounting to USD858 million. The sources also added that the debt and loan package has a blended interest rate of up to 8%. Rue21 was to be acquired at a price of USD42 per share, which was 11 times expensive based on the retailer's expected USD100 million earnings before interest, taxes, depreciation and amortization.

The retailer's shares closed this week down to USD0.41 at USD40.58.

When asked to comment about the matter, the banks and Apex declined to provide one. One source concluded, "The banks can't get out of the deal. It's not fun."