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Posted On: 08/08/2016 2:23:07 PM
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Aéropostale in Talks for Sale to Versa Capital
8/8/16, 10:56 AM
Distressed private-equity investor Versa Capital is considering making a play for Aéropostale Inc., according to the teen apparel retailer.
In papers filed Friday in Aéropostale's bankruptcy case, the retailer said it has been in discussions with Versa regarding a possible stalking horse, or lead, bid for the company at a coming auction.
While nothing is set in stone, court papers show a potential Versa bid could include a cash payment for Aéropostale's inventory, the assumption of more than 500 existing and modified store leases, and "continued employment for thousands of store-level and corporate employees."
An Aéropostale spokeswoman declined to comment Monday, as did a spokeswoman for Versa.
A condition of Versa's bid, however, is a demand that Aéropostale reimburse its sale-related expenses, up to $ 500,000. The U.S. Bankruptcy Court in Manhattan is set to consider the requested reimbursement at a hearing Monday afternoon.
Versa, a Philadelphia-based investment firm, is experienced in the world of teen retail. Last spring, it acquired the Wet Seal chain out of bankruptcy for $7.5 million in cash.
Aéropostale sought chapter 11 protection in early May. It then moved to shut about 150 of its 800 stores. While the company hoped to reorganize around the survivors, it has also put the chain up for sale in a bankruptcy court- overseen sale process.
Bids for Aéropostale are due Aug. 18. If needed, an auction will be held Aug. 22, with the winning bid set for court review at an Aug. 24 hearing.
Aéropostale had sought a longer sale timeline to capture any benefits from back-to-school shopping, but pressure from lenders resulted in the fast-approaching auction. The "compressed timeline" of the sale is what has prompted Versa's demand for the expense reimbursement, Aéropostale said in court papers.
"Versa has advised the debtors it will not make the investment of time and expenses necessary to pursue the transaction without payment of the expense reimbursement," Aéropostale said in Friday's court filing.
Tensions between Aéropostale and private-equity firm Sycamore Partners, which backs Aéropostale lender Aero Investors LLC, have been present throughout the retailer's chapter 11 case. The two blame each other for Aéropostale's financial difficulties.
Aero Investors, as well as its affiliate, Aéropostale supplier MGF Sourcing Holdings, filed an objection to the proposed Versa expense reimbursement saying there isn't proof that the up to $500,000 payment is warranted.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
08-08-16 1256ET
Copyright (c) 2016 Dow Jones & Company, Inc.
disclaimer high risk high reward scenario.
Aéropostale in Talks for Sale to Versa Capital
8/8/16, 10:56 AM
Distressed private-equity investor Versa Capital is considering making a play for Aéropostale Inc., according to the teen apparel retailer.
In papers filed Friday in Aéropostale's bankruptcy case, the retailer said it has been in discussions with Versa regarding a possible stalking horse, or lead, bid for the company at a coming auction.
While nothing is set in stone, court papers show a potential Versa bid could include a cash payment for Aéropostale's inventory, the assumption of more than 500 existing and modified store leases, and "continued employment for thousands of store-level and corporate employees."
An Aéropostale spokeswoman declined to comment Monday, as did a spokeswoman for Versa.
A condition of Versa's bid, however, is a demand that Aéropostale reimburse its sale-related expenses, up to $ 500,000. The U.S. Bankruptcy Court in Manhattan is set to consider the requested reimbursement at a hearing Monday afternoon.
Versa, a Philadelphia-based investment firm, is experienced in the world of teen retail. Last spring, it acquired the Wet Seal chain out of bankruptcy for $7.5 million in cash.
Aéropostale sought chapter 11 protection in early May. It then moved to shut about 150 of its 800 stores. While the company hoped to reorganize around the survivors, it has also put the chain up for sale in a bankruptcy court- overseen sale process.
Bids for Aéropostale are due Aug. 18. If needed, an auction will be held Aug. 22, with the winning bid set for court review at an Aug. 24 hearing.
Aéropostale had sought a longer sale timeline to capture any benefits from back-to-school shopping, but pressure from lenders resulted in the fast-approaching auction. The "compressed timeline" of the sale is what has prompted Versa's demand for the expense reimbursement, Aéropostale said in court papers.
"Versa has advised the debtors it will not make the investment of time and expenses necessary to pursue the transaction without payment of the expense reimbursement," Aéropostale said in Friday's court filing.
Tensions between Aéropostale and private-equity firm Sycamore Partners, which backs Aéropostale lender Aero Investors LLC, have been present throughout the retailer's chapter 11 case. The two blame each other for Aéropostale's financial difficulties.
Aero Investors, as well as its affiliate, Aéropostale supplier MGF Sourcing Holdings, filed an objection to the proposed Versa expense reimbursement saying there isn't proof that the up to $500,000 payment is warranted.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
08-08-16 1256ET
Copyright (c) 2016 Dow Jones & Company, Inc.
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