Authentic, Simon Win Contest to Lend Money to Brooks Brothers
July 10 2020 - 7:22PM
Dow Jones News
By Soma Biswas
Apparel-licensing firm Authentic Brands Group LLC and mall owner
Simon Property Group Inc. won a competition to supply financing to
carry Brooks Brothers Group Inc. through bankruptcy, elbowing aside
a rival by offering an extraordinary zero-interest loan
package.
The $80 million loan from a venture between Authentic and Simon
beat out WHP Global Inc.'s $75 million offer, Brooks Brothers
lawyers said Friday during a virtual hearing in the U.S. Bankruptcy
Court in Wilmington, Del.
The two ventures, both of which are exploring bids for control
of Brooks Brothers, specialize in plucking recognizable brands out
of struggling or bankrupt companies and giving them a new life,
aiming for profitability that eluded them in the past.
Brooks Brothers became their latest target after the storied
company filed for bankruptcy protection Wednesday, a victim of the
coronavirus pandemic's impact on retail.
The retailer, which struggled in recent years with a shift
toward more casual dress styles at work, had been searching for a
buyer since last year with the help of investment bank PJ Solomon.
Brooks Brothers is continuing discussions with multiple interested
buyers, lawyers for the company said at Friday's hearing.
The company accepted the "significantly better" loan offer from
Authentic and Simon after negotiations over the prior 24 hours,
said Brooks Brothers lawyer Connor Flaherty.
The unprecedented winning loan comes with no interest or fees,
Brooks Brothers' advisers said.
Both loan offers required the Brooks Brothers branding and
trademarks as collateral, ensuring that even if the company winds
up liquidating, the lenders would gain control over the
intellectual property. Lenders that finance companies through
bankruptcy have greater power over the process than nearly any
other participant.
The growing list of retail bankruptcies has created many
opportunities for licensing firms such as Authentic and WHP, which
was founded in 2018 with backing from Oaktree Capital Management
LP.
Simon has also become a frequent bidder for bankrupt retailers
with the added motivation of keeping key tenants in its malls,
paying rent.
The Authentic-Simon venture, Sparc LLC, also owns the branding
behind retails names Aéropostale, Nautica and Forever 21. Last
week, it made an offer to buy denim chain Lucky Brands Dungarees
LLC out of bankruptcy.
Last year, Authentic teamed up with Saks Fifth Avenue parent
Hudson's Bay Co. to buy high-end department store Barneys New York
Inc. out of bankruptcy.
WHP owns Anne Klein, the women's clothing line, and recently
bought out midprice men's apparel brand Joseph Abboud from Men's
Wearhouse owner Tailored Brands Inc.
Write to Soma Biswas at soma.biswas@wsj.com
(END) Dow Jones Newswires
July 10, 2020 19:07 ET (23:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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