Item 1.01 Entry into a Material Definitive Agreement.
On March 24, 2019, Ascena Retail Group, Inc., a Delaware corporation (“ascena”) and Maurices Incorporated, a Delaware corporation (“maurices”) and wholly owned subsidiary of ascena, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Viking Brand Upper Holdings, L.P., a Cayman Islands exempted limited partnership (“Buyer”) and an affiliate of OpCapita LLP ("OpCapita”), providing for, among other things, the sale by ascena of a majority interest in maurices to Buyer (the “Transaction”). The Transaction is valued at approximately $300 million. In the Transaction, ascena will receive approximately $200 million in cash and an equity interest in Buyer. Upon the consummation of the Transaction, ascena will own approximately 49% of Buyer. The purchase price is subject to customary post-closing adjustments including for cash, working capital and indebtedness.
The Purchase Agreement contains customary representations, warranties and covenants. Subject to certain limitations, ascena and Buyer also agreed to indemnify each other for breaches of representations, warranties and covenants and other specified matters.
The transactions contemplated by the Purchase Agreement are subject to the satisfaction or waiver of certain customary closing conditions, including, but not limited to, (i) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers), (ii) each party’s performance and compliance with its covenants and obligations contained in the Purchase Agreement, and (iii) the expiration or termination of the application waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Upon the closing of the Transaction, ascena will continue to support the maurices brand on its shared business services platform pursuant to the terms of services agreements to be entered into by the parties, including support for IT, supply chain, sourcing and certain back office functions.
The Purchase Agreement contains customary termination provisions in favor of ascena and Buyer, including by either party if the closing of the Transaction has not occurred by July 31, 2019.
In certain circumstances, Buyer is required to pay, or cause to be paid to, ascena a reverse termination fee in the amount of $15 million.
Buyer has obtained equity commitments from certain investment funds, including funds managed by affiliates of OpCapita, and debt financing commitments from certain third party lenders. Buyer’s obligation to consummate the Transaction is not conditioned on receipt of financing.
The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement, which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 1.01. The Purchase Agreement is attached as an exhibit hereto to provide you with information regarding the terms of the Transaction and is not intended to provide you with any other factual information or disclosure about ascena or any of its subsidiaries. The representations and warranties and covenants contained in the Purchase Agreement were made for the purposes of such agreement and as of a specific date, were solely for the benefit of the parties thereto, may be subject to limitations agreed upon by the parties, including being qualified by disclosure schedules made for the purposes of allocating contractual risk between the parties thereto instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be reflected in ascena’s public disclosures. Investors are not third party beneficiaries under the Purchase Agreement and, in light of the foregoing reasons, should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of ascena or its subsidiaries.