October 15, 2021 – The Court hearing the GBG USA cases issued an amended order approving the sale of Aquatalia Assets to Saadia Group LLC (the “Purchaser”) with that order now reflecting a reduced cash purchase price of $19.75mn [Docket No. 301]. The adjusted purchase price follows a notice of default filed by the Purchaser on October 11th (not filed with the Court) which clearly caused something of a scramble, including the cancellation of a October 13th sale hearing. All, however, ssems to have been resolved, with the Purchaser agreeing to waive the alleged default in exchange for the $3.0mn reduction in purchase price and the Debtors subsequently filed a notice notifying the Court that the sale had closed [Docket No. 307].
The amended sale order now provides: "In accordance with paragraph 40 of the Original Sale Order, and in consultation with the Consultation Parties, the Sellers and the Successful Bidder have agreed to an amended cash purchase price of $19,750,000 for purposes of Section 2.1(a) of the APA; provided that, as
represented by counsel to the Successful Bidder at the Status Conference, (a) the Successful Bidder shall not request or seek in any way a further reduction to the Purchase Price; (b) the default alleged by the Successful Bidder in its notice of default, dated October 11, 2021, shall be deemed waived; and (c) the Successful Bidder shall close the Sale and has agreed to waive all rights and remedies to terminate the APA….All other provisions of the Original Sale Order are incorporated herein in their entirety."
Key Terms of Saadia Group APA
- Purchaser: Saadia Group LLC
- Seller: GBG USA Inc.
- 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 ($19.75mn, reduced from $22.75mn, the “Cash Payment”).
As previously reported, on September 22, 2021, further to an auction conducted on September 15th, the Court hearing the GBG USA cases issued an order approving the sale of the Debtors’ Aquatalia Assets to Saadia Group LLC (the “Saadia Group” or the “Purchaser”) for consideration which included a $22.75mn cash element. The Saadia Group’s asset purchase agreement (the “APA”) is filed as Exhibit 1 to that original order. After “multiple rounds of bidding” which had begun with the Saadia Group’s starting bid of $18,450,100, the Debtors’ stalking horse bidder (WH AQ Holdings LLC, an affiliate of Tengram Capital Partners, or “Tengram” was named as the back-up bidder with consideration including a $21.3mn cash element. Proceeds of the sale will be used to repay the Debtors’ debtor-in-possession (“DIP”) facility and pay the back-up bidder a $500k break-up fee and a $250k expense reimbursement.
In a press release heralding its acquisition, Saadia Group commented: "Saadia Group is acquiring Aquatalia with the vision to enter the luxury footwear market. With Aquatalia's history of style and craftsmanship, Saadia Group sees it as the perfect label to begin their portfolio within the luxury fashion world.
Jack Saadia, Principal and Co-Founder of Saadia Group, added: "The addition of Aquatalia to our growing family of brands strengthens our reach and the ability to serve additional consumers. We look forward to building this brand and are enthusiastic to continue to add to our portfolio within the luxury market."
…More Background on Saadia
This is the third time over the last year that the acquisitive Saadia has sniped e-commerce/IP assets at a bankruptcy auction and (as we predicted) the third time we saw a considerable advancement on a stalking horse opening bid. It has been an unusual strategy, but one that has quickly left Saadia comfortable claiming (at the launch of the digital platform for their Lord & Taylor and Le Tote assets): "we are the leaders in multi-category product manufacturing, wholesaling and retailing…The future of retail is fast and agile, mirrored by our team — which has managed to put together a fantastic assortment of merchandise and a website — in record time of less than 120 days. We are deeply committed to continuing the rich legacy of the brand in a progressive way. Today's unveil is just the beginning."
On October 22, 2020, the Court hearing the Le Tote (including Lord & Taylor) cases issued an order approving the sale of substantially all the Debtors’ assets relating to the e-commerce platforms of Le Tote and Lord & Taylor to Saadia ($12.0mn cash purchase price) topping the $3.75mn cash bid of stalking horse ZG Apparel Group LLP which was entitled to a 3% break-up fee (plus expenses).
On September 5th, Saadia doubled a $20.0mn stalking horse bid (resulting in some "extremely pleased debtors) and purchased the assets of e-commerce retailer RTW Retailwinds whose brands include New York & Company and Fashion to Figure for $40.0mn in cash. In those Chapter 11 cases, the stalking horse was Sunrise Brands, LLC which also received a 3% break-up fee (plus expenses) for its efforts.
Questions as to how relatively unknown Saadia would finance the $40.0mn RTW Retailwinds acquisition were answered when Saadia and White Oak Global Advisors ("White Oak") announced that White Oak had provided Saadia with a $25.0mn ABL facility.
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.
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