Investors Work on the Chain Gang
September 29, 2008,
New York — Acquisitions of retail chains suddenly seem as easy as 1-2-3. These transactions occurred in the last two weeks.
Boscov's finds a buyer
One of the few department store operators still operating under family ownership, Reading, Pa.-based Boscov's told the bankruptcy court that the sale was vital to avoid liquidation. It also said in court papers that it needs to complete the sale by the end of October so it can address inventory shortages ahead of the holiday selling season.
The deal “will result in Boscov's being well-capitalized and allow us to move quickly toward completion of our restructuring,” said Ken Lakin, chairman and ceo, in a release announcing the arrangement.
Boscov's and Versa are negotiating an Asset Purchase Agreement (APA). Boscov's filed for Chapter 11 bankruptcy Aug. 4 and soon thereafter announced it would close 10 stores. The company now operates 39 units.
Philadelphia-based Versa Capital Management, formerly known as Chrysalis Capital Partners, has more than $900 million of committed capital invested in middle market companies in a variety of industries.
Sun Capital snaps up Gordmans
This family-owned chain was acquired for undisclosed terms by an affiliate of private equity firm Sun Capital Partners.
Gordmans marked its 93rd anniversary this year, under the direction of the fourth generation of the founding family. The value-priced department store operates 65 units in 16 Midwestern states from North Dakota and Colorado to Oklahoma and Indiana.
“We are confident that our new partnership will allow Gordmans to fully realize its growth potential and expand its existing footprint,” said Jeff Gordman, chairman and ceo.
Brian Urbanek, vp of Sun Capital Partners, said his firm will work with Gordmans' management to pursue profitable growth. Boca Raton, Fla.-based Sun Capital's retail portfolio includes stakes in Mervyn's, Shopko, The Limited and Rowe Furniture.
Sourcing firm in partial takeover of Gottschalks
This Fresno, Calif-based regional department store chain will sell a major ownership stake to British Virgin Islands-based Everbright Development Overseas Ltd., a firm with hotel and export holdings in China.
Under terms of a letter of intent, Gottschalks will sell Everbright $10 million worth of newly issued common stock pegged at $1.80 per share, amounting to an immediate 29% share of ownership, or some 5.6 million shares. Further, Gottschalks will issue a five-year convertible secured note for $20 million to Everbright, convertible at the fixed price of $1.80 per share. Additionally, Everbright will be warranted to pay either $120 million cash “or certain of Everbright's real estate assets” to buy up to 60 million more shares in the next three years.
In exchange for the $30 million upfront investment, the 61-store retailer will also begin direct-sourcing goods through the Everbright “network of Chinese manufacturers” — and to “establish consignment arrangements” for merchandise categories to be determined.
Mi Wang, chairman of Everbright, said, “This investment and partnership with Gottschalks will extend the distribution in the U.S. for many of Everbright's Chinese manufacturing partners. We look forward to capitalizing on the complementary aspects of our businesses and forming a solid, long-term relationship with Gottschalks.”