Just over a month after Toms Shoes announced it would be ending its one-for-one giving model, the B Corp shoe brand has announced an agreement to cede control to creditors in exchange for a debt restructuring plan.
According to a Reuters report, Toms Shoes LLC will now be jointly owned by Jefferies Financial Group Inc., Nexus Capital Management LP and Brookfield Asset Management Inc. Previously, brand ownership was split between founder and The Amazing Race alum, Blake Mycoskie, and Bain Capital—which acquired a 50 percent stake in the company in 2014, valuing Toms at $625 million.
It’s not yet clear whether Mycoskie will continue to play an active role in the company as he will no longer be an owner, but the move to handover ownership became necessary once it became clear that Toms would not be able to pay back a $300 million loan in 2020 without renegotiating with its creditors.
The new owners will invest $35 million in the company in support of growth down the line.
In a letter sent to employees Friday, which Reuters recovered, Toms CEO Jim Alling said, “Combined with an enhanced capital structure, this funding will enable Toms to further invest in our promising growth areas and continue our commitment to giving, which have been initiated and supported by Bain Capital and Blake over the past five years.”
Since its founding in 2006, Toms has been known for its charitable giving, beginning with its original alpargata silhouette. However, the market it originally occupied has since become crowded and the brand has struggled to compete against brands with lower prices.
Alling, who was previously the chief operating officer of T-Mobile, was brought on as CEO of Toms after the Bain acquisition to help “streamline” the brand’s supply chain, which has since grown and diversified. Toms expanded into lifestyle territory, launching Toms Roasting Co., a premium coffee brand, and Toms Eyewear. Following the one-for-one model, as well, a purchase of eyewear from the brand previously included a donation of prescription glasses and additional medical treatment in areas with limited access to optometry.
In November, Toms said it would no longer continue its one-for-one policy, opting instead for a more straightforward giving model that sends a third of the profits made on a given purchase to a “giving fund” that then makes donations to various charities.