TEXAS PACIFIC SAID TO BE PAYING $527M FOR 88% STAKE IN J.CREW
NEW YORK — The Texas Pacific Group paid about $527 million for 88 percent of J. Crew Group, financial sources said Tuesday.
The purchase price included $66 million in cash for new equity and another $97.4 million in preferred stock with dividends to be paid in additional preferred shares. Texas Pacific also assumed $363 million in J. Crew’s debt.
Officials at J. Crew and Texas Pacific could not be reached for comment on the deal, which was apparently completed last month.
To help finance the purchase, the company is selling $240 million in junk bonds through a private placement co-managed by Donaldson, Lufkin & Jenrette and Chase Manhattan Bank, according to the sources.
One of the junk bond issues is for $155 million in guaranteed senior subordinated notes maturing in 2002. As reported, Moody’s rated the notes at Caa1 and they are expected to bear interest at about 10 1/2 percent. The other piece of the junk bond financing is $65 million in zero coupon bonds, which mature in 2008 and begin to pay cash interest in 2002.
The purchase price comes to about 9.7 times earnings before interest, taxes, depreciation and amortization (EBITDA) after adjusting for expected cost savings by the purchaser. Before the adjustment, the price comes to 11.7 times EBITDA.
As reported in WWD Tuesday, Emily Woods, chief designer of the J. Crew label, will hold the other 12 percent of the company. Her father, Arthur Cinader Sr., chairman, is expected to retire, according to market reports.
J. Crew’s revenues last year were about $800 million.