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Sycamore, Sunrise Brands scrap it out for Limited: Reuters
Posted on Friday, 17 February 2017 14:09
The bankruptcy proceedings of the Limited have taken a twist as Reuters reported stalking horse bidder Sycamore Partners has a new contender for the women’s apparel retailer which filed for protection last month.
Founded in 1963 as a single store, the now-collapsed company expanded both its mall-based brick and mortar and its online e-commerce businesses.
However, declining footfall through shopping centres and an increase in buying items over the internet, as well as disappointing sales, put paid to any growth.
It resulted in, what the court filing called, a “precipitous drop in EBITDA [earnings before interest, depreciation and amortisation] over the course of 2016” and led to cost-cutting measures during the fourth quarter of 2016.
Despite cancelling orders of new stock and making redundancies at its corporate headquarters, Limited had to concede defeat and call in investment banking, financial, and restructuring advisors.
The retailer started marketing its assets in September and looking into different deal structures, which included a sale of the brick-and-mortar company as a whole, among other things, according to the court filings.
However, despite receiving initial interest in its physical operations, no one would actually confirm in writing, so by the time the retailer filed for bankruptcy on 17th January it had already liquidated inventory and ceased operations at 250 locations.
In the meantime, Sycamore swiftly pounced on an acquisition opportunity after losing out to label licensor Authentic Brands and a consortium of mall owners for collapsed teen clothing group Aeropostale last year.
Following several weeks of negotiations and a bidding contest, the private equity firm won the chance of being stalking bidder after increasing the cash portion of its original purchase price by 72.0 per cent.
However, Reuters is now suggesting Sycamore could once again be pipped to the post, this time by Sunrise Brands.
Sources with knowledge of the situation told the news provider the clothing manufacturer has tabled a bid for Limited’s IP, including e-commerce site and social media accounts.
Reuters noted details regarding the matter are confidential but the bankruptcy court demands any competing offer in the auction, which is due on 21st February, has to start at USD 26.50 million.
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