NexCen pours funds into Blass brand
July 14, 2008,
New York – Brand licensing and franchise firm NexCen Brands has committed more than $1 million on the money-losing Bill Blass Couture business – writing off a $950,000 loan and now taking on $425,000 in debt – and says it could invest up to $1.9 million by the end of the year.
NexCen reported the purchase agreement with the owners of the couture line in a filing today with the Securities & Exchange Commission.
“The Bill Blass couture business currently operates at a loss and the company estimates it could need to make a net investment between $1.7 and $1.9 million prior to the end of the fiscal year,” NexCen stated in the filing.
The high-fashion Blass couture business was not part of the Bill Blass brand assets originally purchased by NexCen in February 2007. However, a sale of the brand by NexCen could be made more compelling by offering both the “mass” and “class” segments in a package deal.
Operating as a separate business known as Bill Blass Ltd. LLC, the couture firm was owned by Michael Groveman and Carly Andrews, Inc. That entity purchased the couture line just prior to the NexCen acquisition of Blass, and have since been running the high fashion line as a royalty-free licensee of NexCen.
NexCen stated in the SEC filing, “In the first quarter of 2008, the company loaned approximately $950,000 to Bill Blass Couture to support marketing expenses. Following the closing [of the purchase deal], the company expects to eliminate Bill Blass Couture's obligations to repay this amount.”
The purchase agreement will also permit Groveman to withdraw $25,000 from his company’s “cash reserves” prior to the closing, in exchange for “transitional consulting services” for a period of up to 45 days.
“The purchase price paid at closing,” the SEC filing says, “was comprised of nominal consideration and the company's assumption of approximately $425,000 in net liabilities, excluding amounts owed by Bill Blass Couture to the company.”
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