By  on January 19, 2005

NEW YORK — Bankrupt Gadzooks Inc. is up for sale.

Bids for the struggling Carrollton, Tex.-based 243-unit chain are due on Feb. 4, and should be submitted to Michael O’Hara of Financo Inc. Financo is Gadzooks’ investment banker.

“We have a marketing book that we will send to interested parties after they have signed a confidentiality agreement. We will take the highest or best offer, and we will sell the whole chain, a part of its assets or any combination of assets,” the banker said on Tuesday.

Bankrupt chains looking for the best value sometimes see combined package offers where inventory is sold to one entity and retail locations to another.

A financial source familiar with asset sales in bankruptcy said a possible buyer could be a vertical retailer looking for a combination of brand name and retail locations at a value price.

How much Gadzooks could hope to get in a sale remains to be seen.

The former teen apparel chain, which now targets juniors’, was set to reorganize under Chapter 11. It already had Gryphon Capital of Dallas leading a group of six hedge funds to backstop a $25 million rights offering. The offering would have formed the basis for the retailer’s exit financing. The investor group pulled out earlier this month, following Gadzooks’ report that December same-store sales declined by 3.7 percent.

Gadzooks is already in discussions with at least 2 strategic buyers — one is a retailer — and 2 financial buyers. The financial players are private equity groups, according to a source familiar with the bankruptcy.

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