NEW YORK — Ratings agency Moody’s Investors Service has assigned a B2 corporate family rating to Vince LLC and a B2 rating to the fashion firm’s proposed $174 million senior secured term loan facility.
This story first appeared in the October 23, 2013 issue of WWD. Subscribe Today.
Moody’s said the outlook is “stable.”
The proposed financing is in anticipation of the planned initial public offering of Apparel Holdings Corp., which currently holds the Vince business and the non-Vince businesses under the Kellwood umbrella. Following the IPO, Vince will become Vince Holding Corp. and the non-Vince businesses will be under the Kellwood Holding Corp. umbrella. The planned IPO is for up to $200 million. It is still unclear how many shares will be issued or at what price.
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Moody’s said its rating assignment was due to the company’s limited scale and narrow product focus, as well as its high distribution concentration at luxury department stores. The four largest retail customers are Saks Fifth Avenue, Nordstrom, Neiman Marcus and Bloomingdale’s, which reflected 61 percent of fiscal 2012 total revenues, Moody’s noted. The agency also said the rating took into consideration “Vince’s generally consistent execution, evidenced in its high operating margins,” as well as Moody’s expectation that the “company will maintain a good liquidity profile.”
Standard & Poor’s, also a ratings agency, assigned a preliminary “B” corporate credit rating to the company and the term loan as well, giving similar reasons as Moody’s.
For the six months ended Aug. 3, Vince posted net income of $2.4 million on net sales of $114.7 million. Apparel Holding, including the non-Vince businesses under Kellwood, posted a net loss of $25.6 million on net sales of $363.9 million, according to a filing with the Securities and Exchange Commission related to the planned IPO.
Kellwood acquired Vince in 2006, and was subsequently acquired by Sun Capital Partners in 2008 for an aggregate consideration of $955.4 million, including the assumption of debt, in a cash tender offer.