This Day On The Street
Continue to site
ADVERTISEMENT
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

Aeropostale Enters Into Commitment Letter With Affiliates Of Sycamore Partners For Strategic Partnership And $150 Million Financing

NEW YORK, March 13, 2014 /PRNewswire/ -- Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today announced that it has signed a commitment letter with Sycamore Partners and its affiliates for a strategic partnership and $150 million in senior secured credit facilities. The senior secured credit facilities will consist of a five-year $100 million term loan facility and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, an affiliate of Sycamore Partners. 

Under the terms of the commitment letter, Aeropostale will also issue convertible preferred stock to Sycamore Partners.  The convertible preferred stock gives Sycamore Partners the right to acquire up to 5% of the Company's common stock at an exercise price of $7.25, the closing price of the Company's common stock on March 12, 2014.  Combined with Sycamore Partners' current ownership of Aeropostale's outstanding common stock, Sycamore Partners' ownership on an as-converted basis would increase to approximately 12.3% of the Company's outstanding common stock.

The new strategic sourcing partnership with MGF Sourcing significantly diversifies Aeropostale's apparel production, and all of the Company's sourcing orders will continue to be awarded through a competitive bidding process.  The sourcing partnership will result in Aeropostale's commitment to complete minimum merchandise purchases each year for ten years.  As the Company fulfills its minimum purchase requirements under the sourcing partnership, all amortization payments of the associated facility will be fully rebated.

Stefan Kaluzny, a managing director at Sycamore Partners, will be joining Aeropostale's Board of Directors upon the closing of this transaction. In addition to Mr. Kaluzny, Sycamore Partners will receive the right to appoint one additional member to the board, with a third independent appointee to be mutually agreed upon by Aeropostale and Sycamore Partners. The Board of Directors will increase from 11 to 12 members.  

Thomas P. Johnson, Chief Executive Officer of Aeropostale, commented, "We look forward to working with Stefan and the Sycamore Partners team, and to the valuable retail and operational expertise they bring to Aeropostale.  The terms of our commitment letter with Sycamore Partners are very attractive and provide us with significantly improved financial flexibility backed by their substantial knowledge of the retail industry.  Once the arrangement is in place, we will have additional runway to continue to implement our merchandising, marketing and operational strategies designed to reposition the Aeropostale brand.  Further, the arrangement will enable us to diversify and augment our already powerful sourcing base with MGF Sourcing, which we believe will offer opportunities to further optimize our supply chain.  We strongly believe that our strategy is the correct one to drive long-term value for shareholders."

Mr. Kaluzny stated, "As demonstrated by our firm's significant existing equity ownership in Aeropostale, as well as this new strategic partnership and financing, we believe there is tremendous value in Aeropostale's business.  We look forward to partnering with the Company's other Board members and management team to help Aeropostale realize the full potential of its brand."

1 of 4

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
Only $9.95
14-Days Free
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
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,123.96 -404.07 -2.44%
S&P 500 1,926.84 -45.34 -2.30%
NASDAQ 4,681.7950 -94.7130 -1.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs