NexCen Brands Announces Agreement to Sell Franchise Business to Levine Leichtman Capital Partners

Thu May 13, 2010 6:00am EDT

* Reuters is not responsible for the content in this press release.

NEW YORK--(Business Wire)--
NexCen Brands, Inc. (PINK SHEETS: NEXC) today announced that it has entered into
an agreement to sell its franchise business to an affiliate of Levine Leichtman
Capital Partners ("LLCP"), an independent investment firm with significant
franchise management experience. The purchase price for the business is $112.5
million and is subject to a customary closing working capital adjustment. 

Under the terms of the acquisition agreement, LLCP`s affiliate, Global Franchise
Group, LLC, will acquire the subsidiaries of NexCen Brands that own the
franchise business assets including all of NexCen Brand`s interest in the Great
American Cookies, MaggieMoo's, Marble Slab Creamery, Pretzelmaker, Pretzel Time,
TAF (The Athlete`s Foot) and Shoebox New York, and also will acquire the
Company`s franchise management operations in Norcross, Georgia and its
manufacturing facility in Atlanta, Georgia. Closing of the sale is subject to
various conditions, including approval of the stockholders of NexCen Brands. The
agreement does not provide for any post-closing indemnities. The transaction is
expected to close in the third quarter of 2010. 

In conjunction with the acquisition agreement, NexCen Brands and certain of its
subsidiaries entered into an agreement with their lender, BTMU Capital
Corporation ("BTMUCC"), under which BTMUCC will accept a portion of the sale
proceeds, at the closing of the transaction, in full satisfaction of the
outstanding indebtedness owed to BTMUCC. NexCen Brands will retain the remainder
of the sale proceeds, plus a portion of the cash on hand at closing. NexCen
Brands and certain of its subsidiaries also entered into an amendment and waiver
agreement with BTMUCC, which includes certain limited waivers of covenants and
obligations in the existing credit agreement with BTMUCC. NexCen Brands expects
that these waivers will enable it and its subsidiaries to remain in compliance
with the credit agreement pending completion of the sale transaction. 

The acquired franchise business is expected to be operated by LLCP through its
affiliate as a cohesive, stand-alone business in its current Georgia location.
The agreement between NexCen Brands and Global Franchise Group, LLC also
provides for management and personnel of NexCen Franchise Management, Inc. and
the manufacturing facility to continue with the business under its new
ownership. 

The transaction represents the culmination of a strategic review process that
NexCen Brands undertook to identify and evaluate potential alternative
approaches to addressing its current debt and capital structure, led by its
investment banker, Rothschild Inc. NexCen Brand`s Board of Directors approved
the sale to LLCP`s affiliate for the benefit of all of its stakeholders, taking
into account a range of factors that included the amount of NexCen Brand`s
outstanding debt, the current and anticipated value and performance of its
existing business, anticipated future liquidity needs of the business, the
likelihood of future defaults under the Company`s credit agreement and the
potential availability of waivers or other cures for such defaults, alternatives
other than a sale of the franchising business and the potential consequences of
such alternatives for NexCen Brands` stakeholders, and NexCen Brands` ability to
retain a portion of the sale proceeds and cash on hand for the benefit of other
stakeholders. 

In order to deliver value to stockholders as promptly as practicable, the Board
of Directors expects to approve, and recommend to stockholders, the adoption of
a plan of dissolution that, absent the emergence of a higher value alternative,
would be implemented after the closing of the sale transaction. Subject to the
resolution of existing and contingent liabilities and claims, as required by
Delaware law, it is expected that this will result in a liquidating distribution
to NexCen Brands` stockholders of a meaningful portion of the retained sale
proceeds, although NexCen Brands cannot yet predict with certainty the timing or
amount of any such distribution. 

Kenneth J. Hall, Chief Executive Officer of NexCen Brands, Inc., stated, "We
believe that this agreement with an affiliate of LLCP, a firm with a proven
track record of success in franchise management and extensive capital resources,
represents the most favorable option for all of our stakeholders. We are pleased
that we have entered into an agreement that provides an opportunity to achieve
value for all stakeholders. We firmly believe that being a portfolio company of
LLCP will provide our brands and franchisees with a new platform for growth and
give our dedicated employees the opportunity to continue to manage and build
these businesses." 

Lauren Leichtman, Chief Executive Officer of LLCP said, "We are extremely
pleased to be acquiring this leading franchise management business, which is a
perfect fit with our portfolio and industry experience. We believe that this
franchise business will be able to better capitalize on the many opportunities
for continued expansion under our ownership and as a private company. We look
forward to working with the management team, led by Chris Dull, as well as with
employees and franchisees to provide support for the operations and help drive
future growth." 

Chris Dull, President of NexCen Franchise Management, Inc., stated, "This
transaction provides us with a strong strategic partner and increased financial
flexibility for the franchise business going forward. LLCP`s capital resources
and experience in the restaurant and retail industry, together with the quality
of our franchise brands, will give us the right platform to continue to grow our
franchise business, execute our strategy and support our franchisees and
employees." 

Rothschild Inc. served as financial advisor for NexCen Brands and Kirkland &
Ellis LLP acted as legal counsel to the Company. Honigman Miller Schwartz and
Cohn LLP served as legal counsel for LLCP. 

Change to Earnings Release and Conference Call

The Company will report its first quarter earnings pre-market on Monday, May
17th and will hold a conference call on that same day at 8:30 a.m., in lieu of
the previously scheduled earnings call, to discuss both the Company`s earnings
and today`s transaction announcement. The conference call may be accessed by
dialing 800-944-8766 or 317-713-0002, access code: 27689. Additionally, a
webcast of the call can be accessed at http://www.nexcenbrands.com/investor.html
and will be archived online shortly after the conference call until June 17,
2010. If you are unable to participate in the live conference call, a replay of
the call will be available from May 18th at approximately 10:00 a.m. Eastern
Time until May 24th at 11:59 p.m. Eastern Time. To access, please dial
1-866-281-6782, access code: 154227. 

About NexCen Brands

NexCen Brands, Inc. is a strategic brand management company with a focus on
franchising. It owns a portfolio of franchise brands that includes two retail
franchise concepts: TAF® and Shoebox New York®, as well as five quick service
restaurant (QSR) franchise concepts: Great American Cookies®, MaggieMoo's®,
Marble Slab Creamery®, Pretzelmaker® and Pretzel Time®. The brands are managed
by NexCen Franchise Management, Inc., a subsidiary of NexCen Brands. 

About Levine Leichtman Capital Partners

Levine Leichtman Capital Partners is a Los Angeles, California-based investment
firm that manages approximately $5.0 billion of institutional investment capital
through private equity partnerships, distressed debt and leveraged loan funds.
LLCP is currently making new investments through Levine Leichtman Capital
Partners IV, L.P., and Levine Leichtman Capital Partners Deep Value Fund, L.P.
Successful franchise investments by Levine Leichtman Capital Partners include
Wetzel`s Pretzels, Beef `O`Brady`s, the Quizno's Corporation and CiCi's Pizza,
Inc. For more information about Levine Leichtman Capital Partners, please visit
www.llcp.com. 

Forward-Looking Statement Disclosure

This press release contains "forward-looking statements," as such term is used
in the Securities Exchange Act of 1934, as amended.Such forward-looking
statements include those regarding the expectations for the future performance
of the Company`s brands and expectations regarding the impact of recent
developments on its business.When used herein, the words "anticipate,"
"believe," "estimate," "intend," "may," "will," "expect" and similar expressions
as they relate to the Company or its management are intended to identify such
forward-looking statements.Forward-looking statements are based on current
expectations and assumptions, which are subject to risks and uncertainties.They
are not guarantees of future performance or results.The Company's actual
results, performance or achievements could differ materially from the results
expressed in, or implied by, these forward-looking statements.Factors that could
cause or contribute to such differences include: (1) we may not complete the
transaction on the negotiated terms, within the expected timeframe or at all;
(2) we may not obtain the approval of the Transaction or a plan of dissolution
by our stockholders; (3) we may not obtain governmental approvals of the
transaction or satisfy other conditions required to close the transaction; (4)
transaction fees and costs; economic conditions; the effects of disruption from
the transaction may make it more difficult to maintain relationships with our
employees, franchisees, lender, business partners, vendors and other service
providers; (5) the amount and timing of any distribution to our stockholders may
vary due to various factors within and outside the Company`s control; and (6)
other factors discussed in the Company`s filings with the Securities and
Exchange Commission.The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

This communication is not a solicitation of a proxy from any stockholder of
NexCen Brands. NexCen Brands intends to file with the Securities and Exchange
Commission ("SEC") a proxy statement and other relevant documents to be mailed
to stockholders in connection with the proposed transaction. WE URGE INVESTORS
TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NEXCEN BRANDS
AND THE PROPOSED TRANSACTION. Stockholders will be able to obtain these
materials (when they are available) and other documents filed with the SEC free
of charge at the SEC`s website, www.sec.gov. In addition, these materials (when
they are available) may be obtained free of charge by directing a request to
NexCen Brands` proxy solicitor, Innisfree M&A Incorporated, toll free at (877)
456-3488. NexCen Brands and its directors and executive officers may be deemed
to be participants in the solicitation of proxies in respect of the proposed
transaction. Information about NexCen Brands` directors and executive officers
can be found in NexCen Brands most recently filed definitive proxy statement and
Annual Report on Form 10-K/A filed for the year ended December 31, 2009, which
were filed with the SEC on November 3, 2009 and April 29, 2010, respectively.
Other information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement and other relevant materials
to be filed with the SEC.

FD
Leigh Parrish/Stephanie Rich
212-850-5600 

Copyright Business Wire 2010

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