Pacific Sunwear of California Inc said it received a $60 million loan from private equity firm Golden Gate Capital in return for two board seats and the right to buy a 20 percent stake in the teen retailer.

Shares of the company, which directly competes with Zumiez Inc, jumped as much as 36 percent after the bell.

PacSun also posted a third-quarter loss. It has been struggling in the wake of a weak economy, lackluster merchandise and promotions to attract shoppers.

The retailer of surf- and skate-related clothes and merchandise said it would close 175-200 underperforming stores, among the 819 stores it now operates, in the next 14 months.

A part of the loan from Golden Gate would be used to fund lease buyout payments on these stores.

The closures would help PacSun focus on our targeted base of 550-600 better performing stores, Chief Executive Gary Schoenfeld said in a statement.

San Francisco-based Golden Gate Capital, which has $12 billion capital under management, would have the right to buy about 17 percent of PacSun's stock at $1.75 per share.

The company has investments in more than 20 consumer firms, including Express, J.Jill, Eddie Bauer, Zales and California Pizza Kitchen.

PacSun would also receive a five-year, $100 million revolver from Wells Fargo.

For the current quarter, PacSun expects a loss of 18-27 cents a share.

Analysts polled by Thomson Reuters I/B/E/S had expected a loss of 26 cents.

Shares of the company, that have lost about three-fourths of their value this year, shot up to $1.84 in after-market trading. They closed at $1.35 on Wednesday on Nasdaq.

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