- Tengram Capital Partners investing $50
million into the new platform to facilitate acquisitions of
complementary premium brands
- Joe’s Jeans Inc. to change company name
to Differential Brands Group Inc. to signify change in business
strategy
- Hudson and Robert Graham to serve as
the foundation for growth
- Joe’s Jeans brand and operating assets
to be divested to third parties
- Upon the closing of the Merger, William
Sweedler to join as Chairman and Michael Buckley to lead Company as
Chief Executive Officer
Joe’s Jeans Inc. (NASDAQ: JOEZ) (the "Company") and RG Parent LLC today announced two
transformative transactions. First, the Company has agreed to sell
the Joe’s® brand and operating assets for an aggregate purchase
price of $80 million to two separate buyers, Sequential Brands
Group Inc. (NASDAQ: SQBG) and Global Brands Group Holding Limited
(SEHK Stock Code: 787). Proceeds from the transactions will be used
to retire certain outstanding indebtedness, including all
indebtedness owed to the Company’s senior term loan lender. The
closings of the asset sale transactions are subject to satisfaction
or waiver of certain conditions, including the simultaneous
closings of both asset sales. It is anticipated that the asset sale
transactions will close by September 30, 2015.
Second, the Company has agreed to merge the remaining Hudson
business with the parent company of Robert Graham, RG Parent LLC, a
nationally-recognized fashion brand. The strategic combination of
the Robert Graham and Hudson® brands will provide the foundation of
a new, premium branded consumer platform that focuses on
organically growing its owned brands through a global, omni-channel
strategy, including premium wholesale department store and
specialty stores, direct-to-consumer retail stores, ecommerce, and
licensing. Additionally, the platform intends to seek opportunities
to acquire accretive, complementary, premium-plus brands.
Upon the closing of the Joe’s® brand asset sale transactions,
the Company will be renamed Differential Brands Group Inc. (“DBG”)
and remain listed on NASDAQ. The name change signifies the
transformation of these standalone businesses and the creation of a
unified consumer platform. After the completion of the merger
transactions, the Robert Graham equity holders will own
approximately 47.3% of the Common Stock, the preferred stock owned
by Tengram will be convertible into approximately 23.9% of the
Common Stock, the convertible noteholders will own approximately
14.0% of the Common Stock and the existing stockholders (including
the outstanding equity awards under the Company’s incentive plan)
will own approximately 14.2% of the Common Stock, all on a fully
diluted basis. The merger is subject to regulatory approval, as
well as a vote of the Company’s stockholders on certain matters
related to the merger, including a one for thirty reverse stock
split, and is expected to close during the fourth quarter of
2015.
In connection with the merger, an affiliate of Tengram Capital
Partners (“Tengram”), a
consumer-focused private equity firm and the controlling owner of
the Robert Graham business, has agreed to sponsor a
recapitalization of the combined business to improve and simplify
the capital structure. Tengram will purchase $50 million of new
series A convertible preferred stock of the Company. Upon the
closing of the Merger, the outstanding indebtedness of the Company
owed to its senior revolving credit lender will be paid in full, as
well as certain indebtedness to the convertible noteholders and Joe
Dahan. In connection with the Merger, the holders of the Company’s
outstanding convertible notes, including Peter Kim and an affiliate
of Fireman Capital Partners, will exchange such notes for common
stock, cash and modified convertible notes.
Michael Buckley, current Chief Executive Officer of Robert
Graham, who has previous public company leadership experience at
True Religion, in addition to building Diesel, and Ben Sherman, has
been tapped to lead DBG as Chief Executive Officer, upon the
closing of the Merger. Mr. Buckley stated, “I believe Differential
is uniquely positioned to become one of the leading premium
omni-channel brand platforms in the world, and I am thrilled to
begin leading the company as Chief Executive Officer after the
closing of the Merger.” Mr. Buckley stated, "I am excited to begin
working closely with the Board of Directors, Tengram Capital
Partners and each of our current and future portfolio brands in
building shareholder value in the years to come.” Mr. Sweedler,
Co-founder and Managing Partner of Tengram added, “Tengram is
thrilled to be the lead sponsor in this transformative transaction
and to have the opportunity to create a second public platform with
a focused operating playbook to fuel strong growth in the
foreseeable future.”
The issuance of shares and certain other transactions related to
the merger will require majority approval of the Company’s
stockholders at a stockholder meeting expected to be held during
the fourth quarter of 2015. Joe Dahan, beneficial owner of
approximately 17% of the Company’s outstanding stock, has entered
into a voting agreement, pursuant to which he has agreed to vote
his shares in favor of the merger.
Skadden, Arps, Slate, Meagher & Flom LLP and Piper Jaffray
advised Tengram and Robert Graham on the various transactions while
Akin Gump Strauss Hauer & Feld LLP and Carl Marks Securities
LLC advised Joe’s Jeans Inc.
B. Riley & Co., LLC served as the exclusive financial
advisor to Peter Kim and Fireman Capital Partners on all matters
related to this transaction while Sullivan & Cromwell LLP
provided legal counsel to Mr. Kim and McDermott Will & Emery
LLP provided counsel to Fireman Capital Partners.
About Joe’s Jeans Inc.Joe’s Jeans Inc. designs, produces and
sells apparel and apparel-related products to the retail and
premium markets under the Joe's® and Hudson® brands and related
trademarks. More information is available at the company’s websites
at www.joesjeans.com and www.hudsonjeans.com.
About Robert GrahamRobert Graham is 'American Eclectic.' Since
its launch in 2001, Robert Graham was created on the premise of
introducing sophisticated, eclectic style to the fashion market as
an American-based company with an intention of inspiring a global
movement. Robert Graham received the 2014 "Menswear Brand of the
Year" award from the American Apparel & Footwear Association.
Robert Graham now operates freestanding stores in 23 locations
nationwide. The brand also sells at luxury department stores and
boutiques, and it has showrooms located in New York City, Los
Angeles, Dallas, Toronto, Montreal, and Vancouver
(www.robertgraham.us).
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. The matters discussed in
this news release involve estimates, projections, goals, forecasts,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. All statements in this news release
that are not purely historical facts are forward-looking
statements, including statements containing the words “may,”
“will,” “expect,” “anticipate,” “intend,” “estimate,” “continue,”
“believe,” “plan,” “project,” “will be,” “will continue,” “will
likely result” or similar expressions. Any forward-looking
statement inherently involves risks and uncertainties that could
cause actual results to differ materially from the forward-looking
statements. Factors that would cause or contribute to such
differences include, but are not limited to: the parties’ ability
to close the merger, including the receipt and terms and conditions
of any required governmental approval of the proposed merger that
could reduce anticipated benefits or cause the parties to abandon
the merger, the diversion of management's time and attention from
the Company’s ongoing business during this time period, the impact
of the merger on the Company’s stock price, the anticipated
benefits of the merger on its financial results, business
performance and product offerings, the Company’s ability to
successfully integrate Robert Graham business and realize cost
savings and any other synergies, the risk that the credit ratings
of the combined company or its subsidiaries may be different from
what the Company expects, continued acceptance of our product,
product demand, competition, capital adequacy, general economic
conditions and the potential inability to raise additional capital
if required; the risk that the Company will be unsuccessful in
gauging fashion trends and changing customer preferences; the risk
that changes in general economic conditions, consumer confidence,
or consumer spending patterns will have a negative impact on the
Company’s financial performance; the highly competitive nature of
the Company’s business in the United States and internationally and
its dependence on consumer spending patterns, which are influenced
by numerous other factors; the Company’s ability to respond to the
business environment and fashion trends; continued acceptance of
the Company’s brands in the marketplace; and other risks. The
Company discusses certain of these factors more fully in its
additional filings with the SEC, including its last annual report
on Form 10-K and quarterly report on Form 10-Q filed with the SEC,
and this release should be read in conjunction with those reports,
together with all of the Company’s other filings, including current
reports on Form 8-K, through the date of this release. The Company
urges you to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements
contained in this release.
Any forward-looking statement is based on information current as
of the date of this document and speaks only as of the date on
which such statement is made, and the Company undertakes no
obligation to update these statements to reflect events or
circumstances after the date on which such statement is made.
Readers are cautioned not to place undue reliance on
forward-looking statements.
Additional Information about the Proposed Merger and Where to
Find It
This communication relates to the proposed merger pursuant to
the Agreement and Plan of Merger, dated September 8, 2015, by and
among RG Parent, LLC, JJ Merger Sub LLC and Joe’s Jeans Inc.
The Company will file with the SEC a current report on Form 8-K
that includes additional information on these transactions as well
as the relevant documents. In connection with the proposed merger,
the Company expects to file with the SEC a registration statement
on Form S-4 that will include a proxy statement of the Company that
also constitutes a prospectus of the Company, which proxy statement
will be mailed or otherwise disseminated to the Company’s
stockholders when it becomes available. The Company also plans to
file other relevant documents with the SEC regarding the proposed
merger. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You may obtain a free copy of the proxy statement/prospectus (if
and when it becomes available) and other relevant documents filed
by the Company with the SEC at the SEC’s website www.sec.gov. Copies of the documents filed by the
Company will be available free of charge on its website at
www.joesjeans.com or by contacting the
individual listed below.
Certain Information Regarding Participants
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies in respect
of the proposed merger. You can find information about the
Company’s executive officers and directors in the Company’s Form
10-K/A filed with the SEC on March 30, 2015. Additional information
regarding the interests of such potential participants will be
included in the proxy statement/prospectus and other relevant
documents filed with the SEC if and when they become available. You
may obtain free copies of these documents from the Company by
contacting the individual listed below.
No Offer or Solicitation
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
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version on businesswire.com: http://www.businesswire.com/news/home/20150908006816/en/
Joe’s Jeans Inc.Hamish Sandhu, 323-837-3700 x 304
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