August 31, 2021 – The Court hearing the GBG USA cases issued an order approving (i) proposed bidding procedures for the sale of substantially all of the Debtors' assets, (ii) bidder protections for stalking horse Tengram Capital Partners (“Tengram,” $17.3mn bid in respect of the Debtors’ Aquatalia assets) and (iii) an auction/sale timetable culminating in an auction on September 15, 2021 and a sale hearing on September 21, 2021 [Docket No. 141]. The July 28th Tengram APA is attached to the Debtors' July 29th bidding procedures motion [Docket No. 15] at Exhibit B.
As at filing, the Debtors had already sold two of their brands/assets (Spyder and Frye for @$15.0mn); and in addition to its proposed sale of the Aquatalia assets will continue to market "Other Assets…that fall outside the Stalking Horse Bid, including Capezio, Ely & Walker and MagnaReady."
Although the Debtors' July 29th bidding procedures motion applies globally to both Aquatalia and "Other Assets," the motion is clearly Aquatalia-centric, with the Debtors required to make separate requests to the Court as to any further stalking horse arrangements in respect of Other Assets.
Tengram's other recent Chapter 11-related activity includes the $7.5mn acquisition of the Hair and Skin Care Segment of High Ridge Brands Co. in April 2020. Tengram also already knows something about the Debtors’ assets and its parent company, having purchased (as the then private equity sponsor of Differentiated Brands Group, renamed “Centrica”), the North American licensing business of Global Brands Group Holding Limited for $1.2bn in 2018. Centrica declared bankruptcy in May of 2020 and emerged from bankruptcy the following October privately held by a partnership led by Blackstone and including Ares Management Corporation and HPS Investment Partners.
Even more recently (August 31st) Tengram saw another investment (Sequential Brands) seek bankruptcy shelter. At filing, Sequential Brands noted Tengram's 11.5% equity holding.
Key Dates
- Bid Deadline: September 13, 2021
- Deadline to Notify Qualified Bidders: September 14, 2021
- Auction (if required): No later than September 15, 2021
- Notice of Successful Bidders: September 16, 2021
- Deadline to File Notice of Successful Bidder(s): September 15, 2021
- Sale Objection: September 17, 2021
- Sale Hearing: September 21, 2021
Background
The Debtors' motion provides: "With the aid of their advisors, the Debtors have been exploring and evaluating strategic business opportunities to enhance liquidity, including debt refinancing, cost savings initiatives, proceeds-generating transactions, M&A activities and other strategic opportunities. Given, among other things, their substantial leverage, near term liquidity crisis and the continuing pressure on the Debtors’ business and related impact on retention of key personnel, the Debtors, in consultation with their advisors, conducted a comprehensive liquidity analysis and considered several potential restructuring alternatives. The Debtors ultimately determined that a targeted sale process was the best option to maximize value for all stakeholders. To that end, in or around May 2021, Ducera commenced a targeted marketing process, focused on potential M&A partners and well-funded bidders for which the Debtors’ business represented a strategic opportunity and that possessed the capability of consummating a transaction on an accelerated timeline. Specifically, Ducera commenced an expansive marketing process, which included reaching out to over 45 potential parties in interest. Over 30 parties signed confidentiality agreements and were granted access to a data room for continued diligence.
During this timeframe, and as the Debtors’ liquidity situation became more dire, discussions began to focus on the need to implement a potential sale of the Debtors’ remaining assets through a chapter 11 bankruptcy proceeding. Following an extensive, months long multi track negotiation process, the Debtors’ efforts ultimately culminated with the execution of that certain Asset Purchase Agreement, attached hereto as Exhibit B (together with the schedules and related documents thereto, and as may be amended, supplemented or otherwise modified from time to time, the 'Stalking Horse APA'), dated as of July 28, 2021, by and among GBG USA Inc. and the other Debtor entities party thereto (collectively, the “Sellers”) and WH AQ Holdings LLC (as Purchaser) and Hilco Trading, LLC (as Guarantor) (the 'Stalking Horse Bidder' and its bid, the 'Stalking Horse Bid'). Pursuant to the Stalking Horse Purchase Agreement, the Stalking Horse Bidder has committed to a purchase price of $17.3 million for the Debtors’ Aquatalia brand and related working capital assets (the 'Aquatalia Assets'), subject to higher and better offers.
The Debtors have commenced these chapter 11 cases to implement the sale of the Aquatalia Assets to the Stalking Horse Bidder — subject to Court approval and higher or otherwise better offers in accordance with the Bid Procedures — as well as the Debtors’ other fashion brands and assets that fall outside the Stalking Horse Bid, including Capezio, Ely & Walker and MagnaReady. The Debtors will continue marketing their assets throughout the chapter 11 cases — starting on day 1. The Debtors believe that their proposed sale process, which started months ago, is appropriate to ensure that the Debtors’ assets are sold for the highest price to ensure the best possible outcome for the Debtors’ stakeholders.”
Key Terms of Tengram Stalking Horse APA:
- Purchaser: WH AQ Holdings LLC, a Delaware limited liability company and affiliate of Tengram Capital Partners
- Seller: GBG USA Inc
- Guarantor: Hilco Trading, LLC
- Purchase Price: The aggregate consideration (the “Purchase Price”) to be paid by Purchaser for the purchase of the Acquired Assets shall be: (i) the assumption of Assumed Liabilities and (ii) a cash payment in an amount equal to $17.3mn (the “Cash Payment”).
- Deposit: $2.0mn
- Use of Proceeds: The Debtors shall use a portion of the sale proceeds to repay the Debtors’ proposed limited recourse senior secured superpriority debtor-in-possession financing facility
- Bidder Protections: (i) Break-up fee of $700k (i.e., 4.0% of the cash portion of the purchase price) and (ii) an expense reimbursement of up to $300k
About the Debtors
GBG USA is a company incorporated under the laws of Delaware and is an indirect wholly owned subsidiary of the Company. GBG USA is primarily engaged in operating the wholesale and direct-to-consumer footwear and apparel business in North America.
About Global Brands Group Holding Limited
Global Brands Group Holding Limited (SEHK Stock Code: 787) is a leading branded apparel and footwear company. The Group designs, develops, markets and sells products under a diverse array of owned and licensed brands.
The Group’s Europe wholesale business operates under legal entities entirely separate and independent from the wholesale business in North America. It primarily supplies apparel, footwear and accessories to retailers and consumers across Europe under licenses separately entered into by the Europe entities of the Group. The Group’s global brand management business operates on a different business model and is distinctly separate from the wholesale businesses in North America and Europe.
Global Brands’ innovative design capabilities, strong brand management focus, and strategic vision enable it to create new opportunities, product categories and market expansion for brands on a global scale.
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The post GBG USA Inc. – Court Approves Bidding Procedures for Asset Sale(s) and Tengram Stalking Horse Arrangements in Respect of Aquatalia Assets, Schedules September 21st Sale Hearing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.