Private Equity-Backed Boot Barn Has Set Terms for its IPO

Boot Barn Holdings Inc., the Irvine, Calif.-based seller of western and work-related apparel and footwear, set the terms for its initial public offering on Monday, to sell 5 million shares of its common stock with a price range of $14 to $16 per share.

At the midpoint of the price range, Boot Barn would raise $75 million. Underwriters have the option to purchase an additional 750,000 shares, which would raise an additional $11.25 million dollars.

The offering will value the company at about $375 million ($386 million including the underwriters' option.)

JPMorgan Securities LLC, Piper Jaffray & Co., Jefferies LLC, Wells Fargo Securities LLC and Robert W. Baird & Co. are listed as underwriters.

The retailer estimates that net proceeds from the offering will be close to $67 million at the midpoint, but jump to about $77 million if underwriters exercise their option.

Proceeds will be used to repay part of Boot Barn's existing term loan facility.

The retailer was acquired by Freeman Spogli & Co. in 2011 from Marwit Capital Partners LLP for undisclosed terms. According to the filing, $88.1 million of the purchase price was paid in cash, indicating the amount of equity Freeman Spogli sunk into the deal. The PE firm currently owns a n 89.1% stake in Boot Barn.

After the IPO, the private equity firm will own a 69.1% stake in the company (including the underwriters' option), worth about $266 million. It has no plans to sell shares in the offering. Including a $40 million dividend, that would equate to a total unrealized return to Freeman Spogli of over $300 million, or more than 3 times the approximately $88 million in equity it appears to have sunk into the business.

Financial performance at the retailer has improved under the private equity firm's ownership. Revenue at the company has grown to nearly $346 million for the fiscal year ended March 29, from about $233 million for the same period a year prior, and almost $169 million for the fiscal year ended March 31, 2012.

Meanwhile, Ebitda has similarly grown, to about $28.7 million for the fiscal year ended March 29, from approximately $14.5 million for the same period a year prior, and the close to $1 million in Ebitda for the fiscal year ended March 31, 2012.

In recent quarters, the purveyor of western wear has also demonstrated strong same store sales growth, often in the high single digits, according to the S-1.

Boot Barn claims to be the largest chain dedicated to western-themed apparel, with 155 stores in 24 states. The company says it could eventually boast 400 locations in the U.S.

As of 2012, the retailer had 86 stores, but 55 outlets were added through acquisitions alone, it said.

In 2011 Boot Barn bought RCC Western Stores for undisclosed terms. That deal included RCC's 29 stores located in the Midwest and the South, as well as its e-commerce site.

In 2013, Boot Barn acquired Baskins Acquisition Holdings LLC, which also sells western and work-related apparel and footwear, for undisclosed terms. Baskins had 30 stores in Louisiana and Texas.

Golub Capital LLC provided a $100 million loan facility to refinance some of Boot Barn's debt as well as to provide about $20 million in backing for the purchase of Baskins.

Today, Boot Barn has a $130 million term loan with Golub Capital increased from the original amount that matures on May 31, 2019. The increase helped to fund the $40 million cash dividend to Freeman Spogli.

Boot Barn also has a $70 million revolving credit facility with PNC Bank NA that matures on May 31, 2018. About $42.6 million has been drawn on the revolver, giving the company total debt of over $172 million. As of June 28, cash and cash equivalents were $1.1 million.

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