Centric Brands can put Chapter 11 in its rearview mirror.
The owner of the Zac Posen, Hudson, Swims and Robert Graham brands and licensee for Nautica, Calvin Klein and Jessica Simpson, was able to wipe out $700 million in debt. The company’s financial backers are led by Blackstone, its majority sponsor, along with Ares Management Corp. and HPS Investment Partners.
Blackstone and its affiliates exchanged existing second lien debt for controlling equity stakes in the reorganized firm, while funds managed by Ares and HPS, senior lenders pre-bankruptcy, retained their senior loan positions and also received equity stakes in the new post-bankruptcy firm. Centric secured court approval for its exit from Chapter 11 last month after agreeing to provide close to $6 million to the recovery pool for unsecured creditors.
“Throughout this process, we operated seamlessly without interruption and remained focused on serving our valued partners. We maintained excellent relationships with licensors and our supply chain—and ultimately delivered to our retailers. We now emerge with an optimized business structure, supportive partners, a qualified and engaged Board, and strengthened financials,” said Jason Rabin, Centric CEO. “While the impact of Covid-19 has been challenging for our industry, we are very well positioned to navigate the current environment. We will continue leading the industry in our core segments, including kids, accessories, and men’s and women’s denim and lifestyle. With Blackstone’s support, an improved capital structure, strategic relationships, and industry expertise— we are built for a strong future ahead.”
The company has exit financing from Sound Point Capital in the form of a securitization facility. Centric also has new revolving and term loan facilities from its current secured lenders to help with go-forward operations and strategic objectives.
Centric filed for bankruptcy in May after securing lender support for a $435 million debtor-in-possession financing facility to continue operations while operating under Chapter 11 protection. The coronavirus pandemic disrupted the firm’s wholesale accounts and strangled its cash flow.
Centric was formerly known as the publicly traded Differential Brands Group, which was acquired by Global Brands Group Holding Ltd. in 2018. Following the purchase, the company rebranded as Centric Brands, with Rabin joining as CEO. He was formerly president for GBG’s North American division. In its reorganized structure, Centric will operate on a going-forward basis as a private company.