RLPC: Sycamore cuts equity check for Jones Group buy, adds debt

NEW YORK Wed Feb 26, 2014 3:03pm EST

NEW YORK Feb 26 (Reuters) - Private equity firm Sycamore Partners is slashing the equity commitment for its takeover of The Jones Group Inc by almost half, and in turn adding $250 million in new unsecured debt at Nine West Holdings, sources told Thomson Reuters LPC.

Morgan Stanley, Jefferies and MCS Capital Markets are leading the deal.

The unsecured debt comes in the form of a $250 million, 5.75-year unsecured term loan. Price guidance on the new loan is LIB+525, with a 1 percent Libor floor and a discount of 99. The loan will be not callable for 18 months. It will then be callable at 102, 101, and par.

The additional debt reduces Sycamore's equity commitment to $145 million from $400 million at the Nine West level, according to sources.

At the same time, the loan reduces Sycamore's total equity contribution for its acquisition of The Jones Group to $301 million from $551 million, the same sources said.

The loan is being syndicated on a best-efforts basis. Commitments are due March 3.

Representatives of Sycamore Partners declined to comment.

Along with the added debt and subsequent equity component reduction, price guidance widened on the $470 million, 5.5-year term loan B for Nine West already in market. Guidance on the 5.5 year-loan is now LIB+350-375. The 1 percent Libor floor and 99.5 discount price are unchanged. The loan will benefit from 101 soft call protection for 12 months.

Initial guidance on the $470 million term loan B was set at LIB+325-350. Expected ratings were also lowered to B3/B- from B2/B.

As reported, Sycamore, in conjunction with its takeover of The Jones Group, is preparing for the potential sale of some of the company's brands by carving out divisions and raising debt at those segments.

Nine West Holdings, which includes Nine West Co and Jeanswear Co, will represent the surviving corporation after the buyout and carve-outs are completed.

A $255 million financing to fund Sycamore's acquisition of Stuart Weitzman and subsequent carve-out of the high-end footwear brand is also currently in market. Jefferies and MCS Capital Markets lead the transaction.

There is also a $175 million senior secured asset-based revolving credit facility committed by Wells Fargo and Bank of America Merrill Lynch. Wells Fargo will provide a $25 million senior secured term loan at the Jones Apparel carve-out level.

The buyout financing additionally includes a 70 million pound sterling senior secured unitranche facility committed by KKR Asset Management and a 25 million pound sterling asset-based revolver provided by Burdale Financial, both for the Kurt Geiger segment.

Sycamore has also committed financing for a $455 million bridge loan that the company may use to buy back existing notes.

Jones put itself up for sale in the summer, following pressure from activist investor Barington Capital Group LP to focus on its shoe brands and to cut down its non-core fashion brands.

The Jones Group's brands and licensing agreements include Nine West, Brian Atwood, Anne Klein, Robert Rodriguez, Stuart Weitzman and Easy Spirit.

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