In a regulatory filing with the Securities and Exchange Commission, or Form 8-K, Vince said a subsidiary has an agreement with Rebecca Taylor for it to purchase some Vince-branded finished goods from approved suppliers. Rebecca Taylor would then resell the goods to Vince at a price that is equal to 103.5 percent of the price it paid, or at a 3.5 percent premium.
The purchases would require Rebecca Taylor to apply for letters of credit under its own credit facility, subject to availability under the financing line. Once the merchandise is delivered, Rebecca Taylor would invoice Vince, which in turn has to pay within two business days of receipt of the invoice. The filing said Rebecca Taylor could extend the payment term and has the right to liquidate the goods if Vince fails to pay in a timely fashion.
The arrangement is unusual, but doable as both firms are connected to Boca Raton, Fla.-based private equity firm Sun Capital Partners.
Sun Capital acquired Kellwood Co. for $762 million in 2008. That deal gave it Vince, which was already in the Kellwood portfolio from a 2006 acquisition. Sun later took Vince public in an initial public offering in 2013 that raised $200 million. It still owns a stake in Vince. Separately, in 2011, Kellwood acquired Rebecca Taylor for an undisclosed amount, although funding for the deal was through both Kellwood and Sun Capital. In 2016, Sun Capital sold what was left of Kellwood — women’s and junior’s apparel lines Rewind; JAX, and Briggs New York and a private label business, among other labels — to an unnamed Hong Kong investor group for an undisclosed amount, but retained the Rebecca Taylor, Devlin and Parker brands.
Speaking of the new financing agreement, a Vince spokesman said, “The program is set up to be flexible to address our business needs as we monitor them.” That means the agreement is a form of back up financing in case Vince hits liquidity constraints from limitations or covenant restrictions on its own recently amended term loan and revolving credit line.
As for how long the agreement is in place for, “There is no initial term,” according to the spokesman. The regulatory filing said either side could end the agreement on 60 days’ written notice.