Shares of Aeropostale, which reported its sixth straight quarterly loss last week, rose as much as 17 percent on the New York Stock Exchange on Tuesday. The stock was one of the biggest percentage gainers on the exchange.

" ... The deal with Sycamore eliminates the most significant risk factor over the next 12 months - liquidity," Piper Jaffray analyst Stephanie Wissink wrote in a note.

"At the current (cash) burn rate, this contribution buys Aeropostale another 6-12 months of operating cash."

Aeropostale ended the first quarter with cash and cash equivalents of just $24.5 million, its lowest since 2000, Cowen & Co analyst John Kernan said on Friday.

The company had announced the deal with Sycamore in March.

Aeropostale said it issued convertible preferred stock to Sycamore, giving it the right to acquire up to a 5 percent stake at an exercise price of $7.25, the closing of the retailer's stock on March 12.

Sycamore had a 7.96 percent stake in Aeropostale as of March 13.

Last week, Aeropostale also forecast a bigger-than-expected loss for the current quarter as it struggles to keep pace with changing fashion trends.

Analysts at Morgan Stanley warned that the company could raise going concern doubts as soon as next year as it burns up cash amid mounting losses.

Aeropostale appointed former chief executive Julian Geiger and Sycamore Managing Director Stefan Kaluzny to its board, the company said on Tuesday.

Aeropostale also said it would nominate Kenneth Gilman, a director at jeweler Zale Corp and handbags retailer Kate Spade & Co, for election as an independent director at its annual stockholder meeting this year.

Aeropostale's shares were up 15.8 percent at $3.95 in afternoon trading. The stock had fallen about 62 percent this year to Friday's close.

(Reporting by Maria Ajit Thomas in Bangalore; Editing by Kirti Pandey)