Sept. 2, 2011
/PRNewswire/ -- Liz Claiborne, Inc. (NYSE: LIZ) today announced that it has agreed to sell its global Mexx business to a joint venture in exchange for 18.75% of the common equity of the joint venture and total cash consideration of
, subject to working capital closing adjustments, which includes
of ABL facility debt that is expected to be assumed by the joint venture and refinanced at closing. The Gores Group will own an 81.25% majority interest in the joint venture and has also committed to supporting the business through its ongoing turnaround. The global Mexx business will continue to be led by
as Chief Executive Officer, while
will continue as Chief Executive Officer of Mexx Canada. The transaction is expected to close in the fourth quarter.
William L. McComb
- strengthens Liz Claiborne's financial position;
- enables the Company to de-consolidate the losses from Mexx;
- requires no further cash investment in Mexx by the Company;
- receives total cash consideration of $85 million, net of working capital closing adjustments, which further de-levers the Company, contributing to its goal of reporting 2011 year end debt below that of 2010's year end debt of $578 million; and
- retains an 18.75% interest in the joint venture which gives the Company and its shareholders the ability to participate in the long-term growth potential of Mexx.
, Chief Executive Officer of Liz Claiborne, Inc., said: "We've brought the Mexx European business to the early stages of a true turnaround. But there is more to be done, and in uncertain times and true market volatility, de-risking became essential. This transaction balances risk mitigation, debt reduction, and ongoing upside realization in just the right mix for our shareholders. The forecasted 2011 Adjusted EBITDA loss of approximately
associated with the global Mexx business will be eliminated. The Gores Group is an ideal partner for the Mexx business given its extensive experience in successful corporate carve-outs and growing presence in the apparel retail sector. With 2010 revenues of over
, we believe the Mexx business will ultimately thrive under
's continued leadership as a private enterprise after the completion of this transaction."
Mr. McComb concluded: "We've made a lot of important changes in the past few years, primarily transitioning Liz Claiborne, Inc. to be a more brand-centric and retail-based company, and every decision we make is driven by how to do so as effectively, efficiently and dynamically as possible. At the close of this transaction, we will be a more capital efficient, growth-oriented company and will be able to fully turn our attention to building and growing our core portfolio of global lifestyle brands."