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Can This Joint Venture Save Aéropostale from the Grave?

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Aeropostale

At least 229 Aéropostale stores could get a new lease on life if a bid placed by a group of companies is accepted.

According to papers filed in New York bankruptcy court Tuesday, a $234.4 million offer was made by a joint venture that included licensing firm Authentic Brands Group and mall operator Simon Property Group, in addition to General Growth Properties, Hilco Merchant Resources and Gordon Brothers Retail Partners.

The joint-venture proposal is a “going concern bid” for all of the bankrupt retailer’s assets and a going-forward store base of at least 229 locations.

“The joint-venture bid provides for the assumption of various liabilities, including certain outstanding purchase orders and customer obligations, leaves value available to facilitate the wind-down of the debtors’ estates and the payment of administrative expenses, and includes a cash amount at closing sufficient to repay the DIP [Debtor in Possession] obligations in full at closing and provide a recovery to the prepetition term lenders,” the filing said.

If the offer is not selected, Hilco Merchant Resources, Gordon Brothers Retail Partners and Authentic Brands Group have agreed to provide a back up bid for Aéropostale’s merchandise as well as the teen retailer’s intellectual property.

Liquidation specialists Tiger Capital Group and Great American WF also placed a bid on the business. Sycamore Partners, which is owed $150 million from Aéropostale, reportedly made an offer Monday. The private-equity firm has made no secret of its desire to liquidate the business.

The auction continues Wednesday. If Authentic Brands Group and its affiliates are not successful and Aéropostale is forced to liquidate, the retailer’s remaining 639 U.S. stores will shutter for good and more than 10,000 employees will lose their jobs.

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