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Fifth & Pacific completes sale of Lucky Brand Jeans

February 04, 2014 (United States Of America)

Fifth & Pacific Companies, Inc. announced that it has completed the sale of Lucky Brand Dungarees, Inc. to an affiliate of Leonard Green & Partners, L.P. (LGP) for total consideration of $225 million, with $140 million in cash at closing and the remaining $85 million financed in the form of a three year, secured, seller note, subject to certain capital adjustments. 
 
The seller note can be repaid at any time prior to the end of its three year term, bears cash interest of $8 million per year, and provides for interest to accrete as additional principal in the amount of $5 million per year, resulting in a $100 million maximum payment obligation at maturity. Lucky Brand Jeans has also assumed the proportionate share of the Company's sourcing contract with Li & Fung in addition to other related Fifth & Pacific Companies obligations.
 
In connection with the closing of the acquisition, Carlos Alberini, formerly Co-Chief Executive Officer of Restoration Hardware Holdings, Inc., will become the Chairman of the Board and Chief Executive Officer of Lucky Brand Jeans. Mr. Alberini is also making a significant equity contribution in connection with the acquisition of Lucky Brand Jeans.
 
Fifth & Pacific Companies, Inc. will support the transferred business through a Transition Services Agreement (TSA) with Lucky Brand Jeans while Lucky Brand creates a standalone infrastructure.  The TSA is expected to span up to 24 months.
 
Taken together, the divestitures of Juicy Couture and Lucky Brand Jeans are expected to result in estimated net proceeds of $370 million to $380 million, which includes the face value of the seller note in the Lucky Brand transaction. The aggregate net proceeds for the two transactions reflect estimated cash restructuring and other transition costs and charges associated with the assignment or termination of leases, severance and other associated transition activities, including estimated costs and charges previously disclosed.
 
Centerview Partners and Perella Weinberg Partners advised Fifth & Pacific Companies, Inc. on this transaction. Paul, Weiss, Rifkind, Wharton & Garrison LLP was FNP's legal advisor.  Latham & Watkins LLP was LGP's legal advisor.
 

Fifth & Pacific
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