This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: BCBG Faces Deadlines as Restructuring Continues

NEW YORK ( The Deal) -- Guggenheim Partners is on track to take control of BCBG Max Azria Group from founder and owner Max Azria, as the fashion house continues restructuring its debt with adviser Blackstone Group (BX - Get Report). The latest plan calls for the company to convert a portion of its $685 million in debt into equity, a source close to the situation said.

The Deal first reported that Guggenheim was likely to takeover the Vernon-Calif. based company in December; BCBG has been working on its restructuring ever since then, the source said.

What has mostly taken so long, according to one industry insider, is above and beyond the normal situation with family controlled companies where ties to the company are fraught with emotion. In this case, there is also the creative bond between a designer and his fashion line, which private equity owners had best take note of because consumers also identify brands with their creators.

Advisers to the parties are trying to structure a deal where Azria will accept a place as a minority stakeholder and stay with the company in a creative or advisory capacity, the source said. BCBG is being advised by Skadden, Arps, Slate, Meagher & Flom, while Weil, Gotshal & Manges is providing Guggenheim with legal advice.

BCBG did not respond to requests for comment.

At this point in the negotiations, it is not known how much of the $685 million in debt will be converted into equity, nor what size stakes Guggenheim or Azria will ultimately end up with at this point, the source said.

Despite BCBG's financial troubles, the source said Guggenheim is bullish on the brand's future potential once the company is restructured.

Standard & Poor's Rating Services in a July 16 report said it lowered BCBG's credit rating from CCC to CCC- and its outlook for the women's apparel retailer was negative.

The ratings service said that the company broke covenants on its revolving credit facility because there was a meaningful decline in revenue in 2011. The company reported $1.1 billion in revenue for that year, according to Moody's Investors Service Inc. The year before, Azria claimed the company generated $1.5 billion in revenue.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BX $38.01 1.12%
AAPL $123.25 -0.80%
FB $83.30 0.35%
GOOG $548.34 -1.23%
TSLA $185.00 -2.84%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs