- Pre-arranged agreement with its secured lenders, led by certain
funds managed by Blackstone, Ares Management Corporation, and HPS
Investment Partners
- Secures $435 million of debtor-in-possession financing from
certain funds managed by Blackstone, Ares, and HPS to ensure
uninterrupted operations throughout restructuring
- Voluntarily files for Chapter 11 to implement recapitalization
plan and significantly reduce debt and interest payments
- Expects to emerge as a private company poised for long-term
growth with the support of existing stakeholders
Centric Brands Inc. (the “Company”) (NASDAQ: CTRC), a leading
lifestyle brands collective, announced today that it has entered
into a Restructuring Support Agreement (“RSA” or the “agreement”)
with substantially all of the Company’s secured lenders, led by
certain funds managed by Blackstone (“Blackstone”), Ares Management
Corporation (“Ares”), and HPS Investment Partners (“HPS”), to
recapitalize the Company, provide $435 million in
debtor-in-possession financing and allow the Company to operate
without interruption throughout the restructuring process.
Additionally, the agreement contemplates a timely emergence from
the process with a plan to substantially reduce the Company’s
funded second lien indebtedness by approximately $700 million,
thereby positioning the business for future growth and success. As
part of the agreement, the Company has voluntarily filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New
York, White Plains Division.
Centric Brands intends to continue operating in the ordinary
course. The debtor-in-possession financing secured enables the
Company to continue to meet its financial obligations throughout
this process to employees, licensors, suppliers, and vendors. Upon
completion, the Company plans to emerge from the reorganization as
a private company, under the supportive ownership of its current
lenders.
“Today’s agreement marks the beginning of our next chapter as an
even stronger company and builds upon our progress to date
executing on our long-term strategy. I am honored that Centric
Brands’ lender group has such strong confidence in our team. Their
partnership and support will enhance our ability to continue to
grow our business, providing best-in-class design with an unmatched
sourcing network, retail partnerships, industry expertise, and deep
relationships with licensors,” said Mr. Jason Rabin, CEO of Centric
Brands.
Mr. Rabin continued: “The current crisis has significantly
impacted companies across all sectors. The pandemic disrupted many
of our wholesale accounts’ ordering and constrained our cash flow.
However, we are confident that with added flexibility in our
capital structure, we will be well-positioned for long-term success
during this period and beyond. We thoroughly evaluated all possible
strategic options to address this environment. After extensive
review, we determined that partnering with our current lenders to
pursue this path will result in a stronger financial position and
more resources to support future growth, while allowing us to focus
on serving key stakeholders.”
Plan for Emergence & Partnership with Lender
Group
Under the terms of the RSA, Centric Brands expects to emerge
from Chapter 11 as a private company. Blackstone will exchange
second lien debt for equity interests in the reorganized company.
Existing senior lenders Ares and HPS will retain their senior loan
positions and will receive equity interests in the reorganized
company.
“Our lenders understand the Company’s growth plan and have a
productive and trusted working relationship with its management
team,” added Mr. Rabin. “Centric Brands is looking forward to
benefiting from their capital, strategic insight, global
relationships, and support.”
Blackstone is one of the world’s leading investment firms with
approximately $538 billion in assets under management. Ares is a
leading, global alternative investment manager with $149 billion in
assets under management. HPS is a leading global investment firm
with over $60 billion in assets.
Business Operations
For a majority of its operations, the Chapter 11 process will
not impact the Company’s decision to reopen relevant locations.
“This financial restructuring process will allow us to optimize
our operations while maintaining our valued, long-standing
relationships with our business partners,” added Mr. Rabin. “We
look forward to welcoming our employees and customers back as soon
as it is safe to do so.”
Additional Information
Centric Brands has launched a reorganization hotline, accessible
to U.S. callers at +1 844-974-2131 (toll-free) and international
callers at +1 929-955-3419. Customers, vendors, employees, or other
interested parties who may have questions related to the
reorganization may call this hotline for more information. In
addition, court filings and other documents related to the
restructuring are available on a separate website administered by
the Company's claims agent, Prime Clerk at
https://cases.primeclerk.com/centricbrands.
Ropes & Gray LLP, Dechert LLP, PJT Partners, Inc., and
Alvarez & Marsal served as legal, financial, and restructuring
advisors to Centric Brands.
The restructuring plan is subject to satisfaction of certain
customary conditions, including approvals by the Bankruptcy Court.
If the restructuring transactions contemplated by the restructuring
support agreement are consummated, the Company's existing common
stock will be extinguished and the holders of the common stock will
not receive any consideration, consistent with legal
priorities.
About Centric Brands Inc.
Centric Brands Inc. (NASDAQ: CTRC) (the “Company”) is a leading
lifestyle brand collective that designs, sources, markets and sells
high quality products in multiple segments, including kids, men’s
and women’s apparel, accessories, beauty, and entertainment. The
Company’s portfolio includes more than 100 iconic licensed brands,
including for kids apparel, Calvin Klein®, Tommy Hilfiger®,
Nautica®, Spyder® and Under Armour®; for men’s and women’s apparel,
Joe’s Jeans®, Buffalo®, Hudson Jeans®; for accessories, Kate
Spade®, Michael Kors®, All Saints®, Frye®, Timberland® and Jessica
Simpson®; and for entertainment, Disney®, Marvel®, Nickelodeon® and
Warner Brothers®, among others. Owned brands include Hudson®,
Robert Graham®, Swims®, Zac Posen® and Avirex®. The Company’s
products are sold primarily in North America through leading mass
market retailers, specialty, and department stores, and online.
Centric Brands has unparalleled expertise in product design,
development and sourcing, retail and digital commerce, marketing,
and brand building. The Company is headquartered in New York City
and has offices in White Plains, Los Angeles, Greensboro, N.C.,
Toronto, and Montreal. For more information about Centric Brands
please visit https://www.centricbrands.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The matters discussed
in this news release involve estimates, projections, goals,
forecasts, assumptions, risks and uncertainties that could cause
actual results or outcomes to differ materially from those
expressed in the forward-looking statements. All statements in this
news release that are not purely historical facts are
forward-looking statements, including statements containing the
words “may,” “will,” “expect,” “anticipate,” “intend,” “estimate,”
“continue,” “believe,” “plan,” “project,” “will be,” “will
continue,” “will likely result” or similar expressions. Any
forward-looking statement inherently involves risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include, but are not limited to:
risks related to the impact of the voluntary filing for protection
under Chapter 11 of the U.S. Bankruptcy Code, including the
Company's ability to obtain Bankruptcy Court approval with respect
to motions in the Chapter 11 Case, the effects of the Chapter 11
Case on the Company and on the interests of various creditors,
stockholders and other constituents; Bankruptcy Court rulings in
the Chapter 11 Case and the outcome of the Chapter 11 Case in
general; the length of time the Company will operate under the
Chapter 11 Case; risks associated with third-party motions in the
Chapter 11 Case; the potential adverse effects of the Chapter 11
Case on the Company's liquidity or results of operations and
increased legal and other professional costs necessary to execute
the Company's reorganization; the conditions to which the Company's
debtor-in-possession financing is subject and the risk that these
conditions may not be satisfied for various reasons, including for
reasons outside of the Company's control; uncertainty associated
with evaluating and completing any strategic or financial
alternative as well as the Company's ability to implement and
realize any anticipated benefits associated with any alternative
that may be pursued; the consequences of the acceleration of our
debt obligations; the impact on the Company’s stock price, the
ability to continue operating in the ordinary course and meets its
financial obligations; the ability of the Company to file its
delinquent filings in the prescribed time periods and its ability
to meet the continued listing requirements of the Nasdaq Stock
Exchange or SEC rules and regulations; risks related to the
Company’s ability to implement successfully any growth or strategic
plans; risks related to COVID-19’s impact on the economy and the
Company’s cash flows as a result of government mandated closures of
our retail stores, wholesale partners and disruptions in the supply
and distribution chain; the highly competitive nature of the
Company’s business in the United States and internationally and its
dependence on consumer spending patterns, which are influenced by
numerous other factors; the Company’s ability to respond to the
business environment and fashion trends; continued acceptance of
the Company’s brands in the marketplace; risks related to the
Company’s reliance on a small number of large customers; risks
related to the Company’s ability to manage the Company’s inventory
effectively; risks related to the Company’s ability to continue to
have access on favorable terms to sufficient sources of liquidity
necessary to fund ongoing cash requirements of the Company’s
operations; risks related to the Company’s pledge of all its
tangible and intangible assets as collateral under its financing
agreements; risks related to the Company’s ability to generate
positive cash flow from operations; and other risks. The Company
discusses certain of these factors more fully in its additional
filings with the SEC, including its annual report on Form 10-K for
the fiscal year ended December 31, 2018 and subsequent quarterly
reports on Form 10-Q filed with the SEC, and this release should be
read in conjunction with those reports, together with all of the
Company’s other filings, including current reports on Form 8-K,
through the date of this release. The Company urges you to consider
all of these risks, uncertainties and other factors carefully in
evaluating the forward-looking statements contained in this
release.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Since the Company operates in a rapidly changing environment, new
risk factors can arise and it is not possible for the Company’s
management to predict all such risk factors, nor can the Company’s
management assess the impact of all such risk factors on the
Company’s business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
The Company’s future results, performance or achievements could
differ materially from those expressed or implied in these
forward-looking statements. The Company does not undertake any
obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events, except as may be
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200518005294/en/
Media Contact Edelman for Centric Brands Arielle Patrick
Arielle.Patrick@edelman.com
Investor Contact Edelman for Centric Brands Hunter
Stenback Hunter.Stenback@edelman.com
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