By Michelle Sierra, Natalie Wright and Leela Parker Deo
NEW YORK Feb 14 Private equity firm Sycamore
Partners, in conjunction with its takeover of The Jones Group
Inc, is preparing for the potential sale of some of the
apparel company's brands by splitting up divisions and raising
debt at those segments, sources told Thomson Reuters LPC.
Sycamore and The Jones Group declined to comment.
Upon finalizing the Jones acquisition, Sycamore is looking
to focus on the lower price point and better performing brands.
The private equity firm said it plans to transfer ownership
of assets including the Jones Apparel, Kurt Geiger and Stuart
Weitzman brands to separate controlled affiliates of Sycamore
via carve-out transactions, according to an 8-K filing.
Sycamore, meanwhile, will retain global footwear company
Nine West Co and affordable denim producer Jeanswear Co.
Sycamore will maintain ownership of the carve-outs
Other retailers including Liz Claiborne Inc have created
shareholder value by shedding brands at opportune times, said a
sellside analyst. The retailer changed its name to Fifth &
Pacific Cos in 2012, months after selling its Liz Claiborne and
Monet brands to JC Penney Co, and focused on its higher revenue
brands that at the time included Juicy Couture, Lucky Brand and
The Jones Group owns over 35 clothing and accessories
brands. Among them, the Jones New York brand has exhibited poor
product performance while Nine West and Jeanswear have boosted
Sycamore is raising $470 million in debt at Nine West
Holdings Inc, which will include Nine West Co and Jeanswear Co,
and will represent the surviving corporation after the buyout
and carve-outs are completed. Sycamore offered that amount to
investors on Friday in a term loan B backing the combination.
The $470 million term loan B is guided at LIB+325-350, with a 1
percent Libor floor and 99.5 issue price. Morgan Stanley,
Jefferies and MCS Capital Markets LLC are leading the deal.
Sycamore has also committed financing for a $455 million
bridge loan that the company may use to buy back existing notes.
On February 19, Sycamore will launch $255 million in debt
financing to fund its acquisition of Stuart Weitzman, and
subsequent carve-out of the high-end footwear brand, said
sources. Jefferies and MCS Capital Markets lead the transaction.
It is unclear whether syndication of other spinoff-related
financings will follow.
According to a proxy statement, Wells Fargo and Bank of
America Merrill Lynch committed to provide a $175 million senior
secured asset-based revolving credit facility, and Wells Fargo
committed to provide a $25 million senior secured term loan at
the Jones Apparel carve-out level.
The buyout financing also includes a 70 million pound
sterling senior secured unitranche facility committed by KKR
Asset Management at the Kurt Geiger carve-out level.
A 25 million pound sterling asset-based revolver provided by
Burdale Financial will be used for working capital, capital
expenditures and other general corporate purposes of the Kurt
Geiger business after the closing of the merger.
Backing The Jones Group buyout, Sycamore has provided an
equity commitment of $551 million. KKR Asset Management has
committed $60 million in equity.
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, according to Reuters.
The Jones Group's brands and licensing agreements include
Nine West, Brian Atwood, Anne Klein, Robert Rodriguez, Stuart
Weitzman and Easy Spirit.