United States Of America : Aeropostale to raise $150mn in senior secured credit notes

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Aeropostale to raise $150mn in senior secured credit notes

14
Mar '14

Aeropostale, Inc., a mall-based specialty retailer of casual apparel for young women and men, announced that it has signed a commitment letter with Sycamore Partners and its affiliates for a strategic partnership and $150 million in senior secured credit facilities. The senior secured credit facilities will consist of a five-year $100 million term loan facility and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, an affiliate of Sycamore Partners.

Under the terms of the commitment letter, Aeropostale will also issue convertible preferred stock to Sycamore Partners. The convertible preferred stock gives Sycamore Partners the right to acquire up to 5% of the Company's common stock at an exercise price of $7.25, the closing price of the Company's common stock on March 12, 2014.

Combined with Sycamore Partners' current ownership of Aeropostale's outstanding common stock, Sycamore Partners' ownership on an as-converted basis would increase to approximately 12.3% of the Company's outstanding common stock.

The new strategic sourcing partnership with MGF Sourcing significantly diversifies Aeropostale's apparel production, and all of the Company's sourcing orders will continue to be awarded through a competitive bidding process.

The sourcing partnership will result in Aeropostale's commitment to complete minimum merchandise purchases each year for ten years. As the Company fulfills its minimum purchase requirements under the sourcing partnership, all amortization payments of the associated facility will be fully rebated.

Stefan Kaluzny, a managing director at Sycamore Partners, will be joining Aeropostale's Board of Directors upon the closing of this transaction. In addition to Mr. Kaluzny, Sycamore Partners will receive the right to appoint one additional member to the board, with a third independent appointee to be mutually agreed upon by Aeropostale and Sycamore Partners. The Board of Directors will increase from 11 to 12 members.

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