BCBG Max Azria Group has hired Blackstone Group to identify possible investors for the fashion house.
Rumblings surfaced before New York Fashion Week that the company was hitting a critical financial juncture again, looking for ways to refinance its debt. An arm of Guggenheim Partners is said to own the majority of BCBG’s debt. Financial sources believe that there are at least two, possibly three, tranches in the debt structure, and the Guggenheim affiliates control each one. The loan amount outstanding is $230 million, according to a report by ratings agency Standard & Poor’s.
The firm is best known for its BCBG, Max Azria and Hervé Léger collections.
In May 2011, BCBG was in negotiations with vendors and creditors over payment plans while it worked on a refinancing of its debt. Since then, Guggenheim as an investor has continued to provide financing to BCBG, so much so that it now owns almost all of the debt of the fashion firm.
A spokeswoman for BCBG said Thursday, “We have retained Blackstone to advise on strategic alternatives.”
Financial sources familiar with the plans ruled out an outright sale of the entire company. They said the goal is to connect with potential investors. That means the focus is on restructuring the current debt structure, or possibly a sale of a minority stake in the business. It was unclear exactly how much BCBG is worth, but a valuation is likely to be in the range of $900 million or so range, sources said.
An industry executive said the planned restructuring also could involve putting a new chief executive officer in place who can focus on day-to-day operations, leaving Max Azria and his wife, Lubov, to focus on the creative process. Max Azria is currently chairman, ceo and head designer; Lubov is chief creative officer.
Investment bankers noted that the brands are still respected fashion lines, which should attract investor interest. They also said that there had been overtures in the past few years testing the waters regarding possible buyers. One problem in effecting a sale is that the creative vision is all Max and Lubov Azria’s, and companies with no succession plan tend to make buyers nervous should one or two key individuals leave the firm, they said. That essentially leaves primarily the option of a debt restructuring on the table.
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