ascena retail group Signs Definitive Agreement To Sell Majority Stake In Maurices Brand

MAHWAH, N.J. — March 25, 2019 — ascena retail group inc. today announced that it has signed a definitive agreement to sell a majority interest in its subsidiary, Maurices Inc. to an affiliate of OpCapita LLP as part of its review to enhance shareholder value.

The review includes a comprehensive assessment of its portfolio brands, operations and assets. Management and the company’s board of directors are overseeing this review, which is currently underway.

David Jaffe, chairman and CEO said: “Structural changes in our industry have impacted a number of retailers. We have not been immune to these challenges. In 2016, we initiated our Change for Growth plan, which is on track to deliver run rate cost savings of $300 million to our company by July 2019. We have also identified, and developed plans for, an additional $150 million in savings, which will drive operating margin rate expansion. These efforts are expected to deliver a leaner operating model and enhanced competitive capabilities, but we must do more. To create value for our shareholders, we are planning deliberate actions to generate more profitable growth from those brands and operations in our portfolio that we believe have greater long term potential.”

The maurices transaction is valued at approximately $300 million, and the company expects to receive roughly $200 million in cash after expenses, while maintaining a significant minority interest. Cash proceeds from the transaction will be used to pay down the company’s existing term loan balance and/or for reinvestment in the company’s business in accordance with the terms of its credit facilities.

Additionally, ascena will continue to support the maurices brand on its shared business services platform through a managed services agreement, including support for IT, supply chain, sourcing and certain back office functions. The transaction furthers the development of the company’s platform services business, and is structured to allow ascena to participate in potential upside by partnering with a strong operator who has a history of success in apparel retailing.

“The sale of a majority interest in maurices underscores the value that exists in our portfolio brands. The review and evaluation process we are undertaking, with the help of outside advisors, is designed to recognize this value on behalf of ascena shareholders,” Jaffe said.

Jaffe noted that the maurices transaction will strengthen the Company’s balance sheet and liquidity, and the ongoing managed services arrangement will serve as a template for offering third-party platform services to others.

The transaction is subject to customary closing conditions, including, among other things, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, and is expected to close by early summer.

Guggenheim Securities and Proskauer Rose LLP advised the Company on financial and legal matters, respectively, and PJ SOLOMON and Clifford Chance were financial and legal advisors, respectively, to OpCapita.

Posted March 25, 2019

Source: ascena retail group, inc.