While BCBG Max Azria Group Inc. is negotiating new debt agreements, its vendors and creditors are waiting.
The fashion firm, with interests ranging from mass to luxury, is at work on a deal to refinance its debt and untangle a web of interconnected financial arrangements, leaving vendors and creditors wondering when they’ll be receiving payments.
Credit sources told WWD the firm has been slow in paying creditors, with some invoices unpaid since February. And last week, the fashion house told creditors BCBG had “suspended” all payments pending completion of new financing arrangements, according to one credit contact. Some creditors this week were told the deal is due to be completed by June 14 but that BCBG couldn’t confirm when payments would be made to creditors or whether they would even be paid in full by the end of June.
One financial source said a budget would be formulated before BCBG could determine who will receive money and just how much.
BCBG has been trying to complete a deal to secure a new $230 million term loan to refinance a portion of its debt. A $94 million first-lien term loan comes due on Aug. 10, but that date would be moved up to June 16 if the $230 million term loan isn’t completed. If and when it’s refinanced, its maturity would extend until 2015. The company hopes to complete the refinancing by June 14, in advance of the deadline.
According to credit sources, BCBG last August refinanced a $460 million asset-based loan through 2014. However, the ABL requires a “timely” refinancing of its first-lien term loan.
Goldman Sachs is said to be working on the proposed financing.
BCBG did not respond to requests for comment. BCBG’S public relations representative sent out an e-mail Thursday saying she had resigned.
On May 6, credit ratings agency Standard & Poor’s said BCBG was refinancing its first- and second-lien debt to extend the maturities and improve liquidity.
S&P gave the proposed senior secured first-lien term loan a rating of “B-minus,” six ticks below investment grade, and raised BCBG’s corporate credit rating to “B-minus” from “CCC-plus.” While risky, a rating in the “B” family indicates that the debtor has the capacity to repay its obligations.
On May 9, Moody’s Investors Service, another ratings agency, assigned a “B2” rating to the proposed $230 million term loan. It said “completion of the proposed refinancing is critical to the ongoing viability of the company.”
BCBG is also working on amending and extending its $229 million second-lien term loan held by affiliates of Guggenheim Partners.
Max Azria, the Tunisian-born chairman, chief executive officer and founder of BCBG, in 2006 hired Goldman Sachs and Citigroup as financial advisers to explore taking the firm public. At the time, the company already had French fashion house Hervé Léger and Spanish chain Don Algodón under its umbrella. It also had just acquired the Max Rave chain, which it closed in January.
While the initial public offering failed to materialize, Azria has been busy building up his fashion empire even with a worsening cash crunch.
In 2006 the firm acquired French retail chain Alain Manoukian. A 2006 deal to sell ready-to-wear line Tex by Max Azria at Carrefour fizzled in 2009 following a poor sales performance. A Miley Cyrus line was launched as an exclusive at Wal-Mart in 2009, although Moody’s suggested the line was not performing well when it stated “consolidated revenues are expected to decline in the near term due to deteriorating volumes in BCBG’s mass market segment.”
Late last year, BCBG partnered with Berggruen Holdings to buy bankrupt German department store chain Karstadt.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews