The end of the forbearance period for NexCen Brands Inc.’s borrowing facility may mark the conclusion of Robert D’Loren’s tenure as the company’s chief executive officer as well.
This story first appeared in the August 15, 2008 issue of WWD. Subscribe Today.
Banking sources speculated this week that D’Loren’s days could be numbered and that his exit could be imminent.
Financial and market sources said D’Loren’s departure from NexCen is tied to when the company can complete a restructured agreement with BTMU Capital Corp. NexCen said Monday that the company and BTMU agreed to extend a forbearance period by one week until today.
Executives at NexCen could not be reached for comment Thursday.
The agreement with BTMU gives NexCen access to additional cash from its lockbox accounts and limited forgiveness from “certain alleged defaults.” The company agreed to give monthly rather than quarterly updates on its operations and cash flow to the lender.
NexCen has been battling the clock since May when it disclosed that $30 million of the $70 million it borrowed to acquire Great American Cookies must be paid down by Oct. 17.
The initial deadline NexCen had to cure the defaults was set for July 17. That was later extended until Aug. 8 before the parties pushed it back again.
NexCen said Monday that it’s continued to work with BTMUCC to effect a comprehensive restructuring of the company’s borrowing facility, and that it expects such agreements to be completed next week.
Meanwhile, sources also said talks with Windsong Brands LLC for the purchase of home brand Waverly have apparently stalled, and that NexCen will need to pursue talks again with Iconix Brand Group Inc. if it wants to sell the asset. Executives at Waverly could not be reached for comment.
As reported, NexCen was in talks with Iconix in early July, before intensifying the discussions with Windsong. An industry executive said Waverly is a “better fit” for Iconix due to its Pillowtex operation. Waverly is expected to be sold for between $30 million and $32 million. NexCen bought Waverly for $36.8 million in May 2007.
In addition, the sale of the Bill Blass brand is likely to heat up come September. Banking and industry sources said NexCen’s financial adviser only last week began sending out one-page information sheets about existing Blass licenses.
NexCen, as a brand management company engaged in licensing, wouldn’t have much information about the Blass brand other than licensing agreements and royalties in place for those agreements.
The financial adviser has requested that initial bids for the Blass brand be submitted by mid-September.
So far, Arnold Simon’s Designer Licensing Holdings, which has the Blass jeanswear license and owns 10 percent of the Blass trademark, has offered a preliminary $24 million for the brand. Angelo, Gordon & Co., the private equity group that has owned the Bill Blass New York direct sales operation since 2006, has offered $26 million for the brand, bankers said.
Both exploratory offers were rejected, in part because Blass wasn’t officially being marketed at the time they were made.
Sources said Angelo, Gordon has the deep pockets to invest in growing the brand. Founded in 1988, the firm manages close to $20 billion in assets. In April, it filed a shelf registration form with the Securities and Exchange Commission for an initial public offering of units of Angelo, Gordon Acquisition Corp., a newly formed special purpose acquisition corporation, or SPAC.
The private equity firm was aiming to raise $300 million through the IPO, or 30 million units at an offering price of $10 per unit. According to the regulatory filing, each unit consists of one share of common stock and one warrant. Each warrant entitles the holder to purchase one share of common stock.
In a July filing with the SEC, the SPAC said its “efforts at identifying a target business will not be limited to a particular industry or group of industries.”
So far bankers and buyers eyeing the Blass brand have pegged a purchase price of between $26 million and $28 million. The higher price of $28 million is just more than half the $54.6 million paid by NexCen in cash and stock for the brand in December 2006.
One banker valued Blass in its current business structure at $20 million, in part because the brand is still in turnaround mode and the existing licenses does not yet have a proven track record.
Another banker said valuing Blass is risky because “any buyer would have to determine what it thinks it can do with the Blass label through brand extensions, channels of distribution and international expansion and make an offer based on those projections.”