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December 8, 2020 – The Court hearing the Ascena Retail Group cases issued an order approving the $540.0mn private sale of the Debtors' remaining businesses, comprised of the Lane Bryant brand and the Premium business segment (the latter including Ann Taylor, LOFT, and Lou & Grey brands) to Premium Apparel LLC (the “Buyer”), an affiliate of Sycamore Partners Management, L.P. (collectively, “Sycamore”) [Docket No. 1295]. The Sycamore asset purchase agreement (the “APA”) is attached to the order at Exhibit 1 (also attached are the related Assumption Agreements, the Bills of Sale and Assignment Agreements, the Intellectual Property Assignment Agreements, and the Escrow Agreement).
In a press release announcing the proposed transaction, the Debtors stated: "Premium Apparel will acquire the brand assets for a purchase price of $540 million, on a cash-free and debt-free basis, subject to certain adjustments, and the assumption of certain liabilities. Under the APA, Premium Apparel has committed to retaining a substantial portion of the retail stores and associates affiliated with these brands.
The transaction is expected to be completed by mid-December. As previously disclosed, FullBeauty Brands Operations, LLC has completed its acquisition of Catherines’ intellectual property assets and e-commerce business, and Justice Brand Holdings LLC, an entity formed by Bluestar Alliance LLC, has completed its acquisition of the intellectual property of Justice."
The Debtors' sale motion elaborates, “In parallel with pursuing confirmation of the Plan, consistent with the terms of the RSA and in consultation with the Term Lenders, the Debtors engaged in a thorough and comprehensive marketing process to determine whether a sale transaction of all or a portion of the Debtors’ business would result in a higher and better value for the benefit of all stakeholders.
To that end, following the Petition Date, the Debtors instructed their investment banker, Guggenheim Securities, LLC (‘Guggenheim Securities’), to pursue a comprehensive marketing process and a potential sale of all or a portion of the Debtors’ businesses. As part of this extensive marketing process, Guggenheim Securities contacted over 44 parties to gauge interest in a potential sale of one or more of the Debtors’ business segments.
To date, the Debtors have consummated value-maximizing sale transactions of their Catherines and Justice businesses. Pursuant to this Motion, the Debtors now seek approval of a sale (the ‘Sale Transaction’) of their remaining businesses, which include the Lane Bryant brand and the Premium business segment, the latter comprised of Ann Taylor, LOFT, and Lou & Grey, to Premium Apparel LLC (the ‘Buyer’), an affiliate of Sycamore Partners Management, L.P. (collectively, ‘Sycamore’). The Debtors have determined, in an exercise of their business judgment and in consultation with the Term Lenders, that the Sale Transaction constitutes the highest and best value for the Lane Bryant brand and the Premium business segment.
Throughout this marketing process, the Debtors maintained a commitment from the consenting Term Lenders under the Restructuring Support Agreement whereby the Consenting Stakeholders agreed to extend the Plan process, while leaving open the option to pivot to a sale transaction on terms acceptable to the Debtors and the consenting Term Lenders.
On August 14, 2020, the Debtors received an indication of interest from Sycamore that valued the Debtors’ Lane Bryant and Premium business segments between $450 million and $550 million. Over the next fourteen weeks, the Debtors engaged with Sycamore and a steering committee of the consenting Term Lenders represented by Milbank LLP and Greenhill & Co., Inc. to negotiate the terms of the Sale Transaction. The parties ultimately achieved consensus around the terms of the Sale Transaction and, on November 26, 2020, executed the purchase agreement dated November 26, 2020 between certain of the Debtors (the ‘Selling Entities’) and the Buyer, attached hereto as Exhibit B (the ‘Purchase Agreement’). The Purchase Agreement contemplates a purchase price of $540 million, subject to certain adjustments, the assumption of certain liabilities, and other customary terms, as described in this Motion. The Purchase Agreement also contemplates that Sycamore will have until the date that is 210 days following the Petition Date to designate certain executory contracts and unexpired leases for assumption and assignment to the Buyer (with the Buyer paying the related cure costs consistent with the terms of the Purchase Agreement).
Concurrently with executing the Purchase Agreement, the Debtors and the consenting Term Lenders executed an amendment to the Restructuring Support Agreement providing for, among other things, extension of the applicable milestones to allow for the consummation of the Sale Transaction and support for an amended Plan that will provide for the distribution of the Sale Transaction proceeds and other cash on hand. The amended Plan provides for sufficient reserves to pay all administrative, priority, and other claims required to be paid under the Plan. In the event the Sale Transaction does not close, the amended Restructuring Support Agreement provides for the Term Lenders’ continued support for the recapitalization transactions embodied in the original Plan and Restructuring Support Agreement. In the event the Sale Transaction closes, there will be no material difference in the Plan treatment of the Debtors’ stakeholders other than the holders of the Term Loan Claims, a substantial majority of which are bound by the Restructuring Support Agreement to support the Sale Transaction and the amended Plan. Contemporaneously with filing this motion, the hearing to consider confirmation of the Plan was continued to December 15, 2020. In the event the Sale Transaction closes, the confirmation hearing will be further continued in accordance with the Purchase Agreement to a date not before February 19, 2021. The amended Plan does not alter the terms of the global settlement previously agreed with the Creditors’ Committee and the Debtors are in discussions with the Creditors’ Committee regarding their support for the Sale Transaction.”
Key Terms of the APA:
- Selling Entities: Ascena Retail Group, Inc., 933 Inspiration LLC, ANN Card Services, Inc., ANN, Inc., AnnCo, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor of Puerto Rico, Inc., AnnTaylor Retail, Inc., AnnTaylor, Inc., Ascena Retail Holdings, Inc., Ascena Trade Services, LLC, ASNA Plus Fashion, Inc., ASNA Value Fashion LLC, BackingBrands Buying Agent, LLC, BackingBrands Solutions, LLC, C.S.F. Corp., Catalog Receivables LLC, Catalog Seller LLC, Catherines #5124, Inc., Catherines #5147, Inc., Catherines Stores Corporation, Catherines, Inc., CCTM, Inc., Charming Sales Co. Four, Inc., Charming Sales Co. One, Inc., Charming Sales Co. Three, Inc., Charming Sales Co. Two, Inc., Charming Shoppes of Delaware, Inc., Charming Shoppes Receivables Corp., Charming Shoppes Seller, Inc., Charming Shoppes Street, Inc., Charming Shoppes, Inc., Chestnut Acquisition Sub Inc., Crosstown Traders, Inc., CS Holdco II Inc., CSGC, Inc., CSI Industries, Inc., CSPE, LLC, DBI Holdings, Inc., DBCM Holdings, LLC, DBX, Inc., Duluth Real Estate LLC, Etna Retail DC, LLC, Fashion Apparel Sourcing LLC, Fashion Service Fulfillment Corporation, Fashion Service LLC, GC Fulfillment, LLC, Lane Bryant #6243, Inc., Lane Bryant of Pennsylvania, Inc., Lane Bryant Outlet 4106, Inc., Lane Bryant Purchasing Corp., Lane Bryant, Inc., PSTM, Inc., Sponsi, Inc., Spirit of America, Inc., Too GC, LLC, Tween Brands Agency, Inc., Tween Brands Direct Services Inc., Tween Brands Investment, LLC, Tween Brands Marketing, Inc., Tween Brands Service Co., Tween Brands, Inc., Winks Lane, Inc., Worldwide Retail Holdings, Inc.
- Buyer: Premium Apparel LLC
- Purchase Price: $540.0mn (the "Base Amount") plus (i) the amount, if any, by which the Estimated Net Working Capital Amount exceeds the Targeted Net Working Capital Amount ($50.575mn), minus (ii) the amount, if any, by which the Targeted Net Working Capital Amount exceeds the Estimated Net Working Capital Amount, minus (iii) the Estimated Indebtedness and plus (iv) the Estimated Deadband Exceptions.
- Buyer Protections: (i) termination fee of $16.2mn and (ii) expense reimbursement of $5.4mn
About the Debtors
According to the Debtors: “ascena retail group, Inc. (Nasdaq: ASNA) is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion segment (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion segment (Lane Bryant, Catherines and Cacique) and for tween girls under the Kids Fashion segment (Justice). ascena retail group, Inc. through its retail brands operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico.”
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