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Ann Taylor and Loft Change Hands in Sycamore’s $540M Ascena Deal

Bankrupt Ascena Retail Group Inc.’s exit strategy for its retail brands will be a sale to Premium Apparel LLC, an affiliate of private equity firm Sycamore Partners, for $540 million plus the assumption of certain liabilities.

The transaction is set to close by the middle of December. Ascena said Thursday that the deal will include its premium Ann Taylor and Ann Taylor Loft nameplates, along with its Lane Bryant and Lou & Grey brands. The deal still requires the approval of the bankruptcy court. The sale also means that Ascena’s senior lenders have changed their minds about taking a controlling stake in the bankrupt firm in a $1 billion debt-for-equity swap, preferring instead to sell the remaining assets and splitting up the proceeds.

“Under the [asset purchase agreement], Premium Apparel has committed to retaining a substantial portion of the retail stores and associates affiliated with these brands,” Ascena said.

“The commitment Sycamore has made to our people and business is a testament to the long-term growth potential of our brands,” Gary Muto, Ascena’s CEO, said. “At Ascena, we have made significant progress in our financial restructuring process. We have worked diligently to maximize the value of all of our brands, and today’s agreement with Sycamore is the latest example.”

In September, the women’s specialty retailer sold its Catherines plus-size operation to FullBeauty Brands Operations LLC for $40.8 million. And more recently, Ascena via a bankrutpcy court auction sold its tween and juniors retail chain Justice to private equity firm Bluestar Alliance for $90 million plus the assumption of certain liabilities.

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“Ann Taylor, Loft, Lane Bryant and Lou & Grey are well-known brands, each with passionate associates and loyal customers,” Stefan Kaluzny, Sycamore’s managing director, said. “These brands have significant potential, and we are excited about the opportunity to partner with Ascena’s talented team to continue delivering new and relevant experiences for customers.”

Although Sycamore recently sold its Coldwater Creek operation, it still has built up a sizable retail portfolio. Chains under its ownership include Belk, Talbots, Hot Topic, Staples. The Limited and Torrid.

Ascena filed its voluntary Chapter 11 petition in July. At the time, it closed 1,600 doors, shrinking its store fleet to about 1,200 locations. Justice and Catherines accounted for about 1,000 of those closed doors. Ascena in September said it would close an additional 23 Justice stores. With the sale of the tween nameplate to Bluestar, it is now expected that all Justice stores would remain open through the holiday season and then close early next year.

There was no word on how many additional stores would likely close for Ascena’s remaining nameplates as they transition to new ownership under Sycamore.