Teen Retailer Aeropostale Avoids Bankruptcy Liquidation
02 September 2016 - 1:41PM
Dow Jones News
By Peg Brickley
Landlords, liquidators and licensing firm Authentic Brands Group
have been declared the winners of a contest for distressed retailer
Aéropostale, with an offer of $243.3 million in a deal that
preserves part of the business, according to a person familiar with
the matter.
The results of a bankruptcy auction that closed late Thursday
mean Aéropostale will survive chapter 11 in a streamlined form,
with a chain that once numbered 800 stores cut back but still in
operation.
Major Aéropostale landlords Simon Property Group and General
Growth Properties are part of the joint venture that formed ranks
just this week, as the sprawling store chain seemed headed to
liquidation.
Also part of the Authentic Brands joint venture are liquidators
Gordon Brothers Retail Partners LLC and Hilco Merchant Resources
LLC. Terms of the joint venture deal call for 229 stores to be kept
in operation. The venture partners will be selling off inventory in
stores that are slated to be shut down.
The auction that took place in New York pitted the joint venture
against Sycamore Partners, a private-equity firm that went into the
bidding war with a key advantage.
Sycamore controls a major secured lender to Aéropostale and won
a court fight that entitled it to use debt owed it by the retailer,
$151 million, as currency at the auction. Rivals had to bid with
cash, a disadvantage that caused some buyers that were willing to
keep Aéropostale alive to walk away, the person said.
The private-equity firm has declined to comment as the auction
played out over a four-day period.
Sycamore stayed in the competition until Thursday night, with a
bid that, according to the source, would have mean a full-chain
liquidation for Aéropostale, with hundreds of stores going dark and
thousands of jobs lost. The private-equity firm, which has been
critical of Aéropostale's management and expressed doubt about the
chain's ability to survive, bid $1 million more than the price
offered by the joint venture.
If the joint venture bid fails to close, Sycamore will be
declared the winner.
Auction results will be put before a bankruptcy judge Sept. 12,
for a ruling on whether Aéropostale's choice of a winner meets the
test of being the highest and best for creditors of the troubled
company.
Lillian Rizzo contributed to this article.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
September 01, 2016 23:26 ET (03:26 GMT)
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