NEW YORK (TheStreet) -- Aeropostale (ARO) surged Tuesday after the teen apparel retailer said it had completed its previously announced $150 million financing from affiliates of Sycamore Partners, a private equity firm.
The company announced the financing on March 13 and said it had acquired a five-year, $100 million term loan facility and a 10-year, $50 million term loan facility that includes a sourcing arrangement with Sycamore affiliate MGF Sourcing. Aeropostale issued convertible preferred stock to Sycamore, which allows the firm to buy up to 5% of the company's common shares at an exercise price of $7.25, its closing price on March 12.
Piper Jaffray upgraded Aeropostale to "neutral" from "underweight" and set a $4 price target in the wake of the news. The firm said the deal with Sycamore eliminates significant risk over the next 12 months.
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The stock was up 13.2% to $3.86 at 10:41 a.m.
Separately, TheStreet Ratings team rates AEROPOSTALE INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate AEROPOSTALE INC (ARO) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."