Bluestar Alliance LLC said Wednesday it has won the “stalking-horse” position for Justice, the tween brand that’s part of the bankrupt Ascena Retail Group.
Bluestar said its bid is valued in excess of $60 million, consists of $44 million in cash, and includes the intellectual property and related assets as well as assumption of certain liabilities.
Bluestar outbid Premier Brands Justice, an acquisition vehicle for IHL, a men’s, women’s and children’s apparel manufacturing and wholesale company, for Justice. Last week, Ascena said it accepted a $35 million bid for Justice assets from Premier Brands. That asset purchase agreement, or APA, was subject to higher or otherwise better offers, among other conditions.
“We had a stalking horse bidder signed up – however, they had not yet been approved by the court,” Carrie Teffner, Ascena’s interim executive board chairman, explained. “BlueStar came in with a higher bid right before the court hearing,” held Tuesday this week. “As a result BlueStar was approved by the judge at the hearing yesterday as the stalking horse bidder. The auction has not happened. That is scheduled for Nov 5. So we won’t know the final buyer for the business until after the auction.”
Ascena has been bankrupt since July 23 and has said it will conduct an auction for Justice as required by bankruptcy law. Ascena has already closed about 600 of Justice’s 800 locations. Ascena did not comment on the Bluestar deal for Justice.
“We offered a bid that we believe speaks to the strong existing connection consumers have to the Justice brand and its future potential,” stated Joey Gabbay, chief executive officer of Bluestar Alliance. “We look forward to maximizing the business with both current and new partners, as well as growing the brand to enhance and expand its current footprint.”
Ralph Gindi, chief operating officer of Bluestar Alliance, added, “We have had significant success in the teen, tween and children’s markets, and believe the Justice brand will benefit from our existing relationships and sizable market-share.”
Bluestar, founded in 2006 by Joseph Gabbay and Ralph Gindi, owns, manages and markets a portfolio of consumer brands including Hurley, Bebe, Tahari, Brookstone, Kensie, Limited Too, Nanette Lepore, Catherine Malandrino and others. Bluestar’s retail footprint includes more than 250 stores, shop-in-shops, and distributors around the world.
Last month the company signed a deal to sell the intellectual property of its Catherines plus-size division to FullBeauty Brands Operations LLC for $40.8 million and potential upward adjustment for certain inventory. The Catherines stores were all closed.
Ascena continues to operate its Ann Taylor, Loft, Lane Bryant and Lou & Grey brands through stores and web sites.
At the end of August, the company was operating about 1,500 stores, but it’s continuing to streamline and expects to drop down to 1,300 stores. Pre-bankruptcy, Ascena operated 2,700 stores. In addition to closing the Catherines stores, Ascena closed all of its stores across brands in Canada, Puerto Rico and Mexico and prior to the coronavirus outbreak, Ascena liquidated Dressbarn and sold off the Maurices chain.
Its restructuring plan involves reducing its debt by about $1 billion, from $1.3 billion. The hearing to consider confirmation of the plan has been scheduled for Friday.
The company has also received approval from the bankruptcy court for debtor-in-possession financing, which includes a $400 million ABL facility and a $312 million term loan, which includes $150 million in new money, which converts to exit financing upon the company’s emergence from the Chapter 11 process.