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Joe’s Jeans to repay term loan and revolver, resolving defaults
By Angela McDaniels
Tacoma, Wash., Sept. 8 – Joe’s Jeans Inc. plans to repay its senior term loan and senior revolving credit facility in full, according to a company news release.
As previously reported, the company defaulted on the term loan and revolver after it failed to meet an EBITDA financial covenant for the 12 months ended Sept. 30, 2014. More defaults followed in February 2015 due to the failure to meet certain financial covenants and to deliver the financial plan and forecast for 2015 on time.
In July, the company received a forbearance through Oct. 15. However, the forbearance period was terminated later that month when the company failed to comply with sale/recapitalization process milestones.
On Tuesday, the company announced that it will sell the Joe’s brand and operating assets for $80 million to two separate buyers, Sequential Brands Group Inc. and Global Brands Group Holding Ltd., and merge the remaining Hudson business with the parent company of Robert Graham, RG Parent LLC.
In connection with the RG Parent merger, Joe’s Jeans will sell $50 million of series A convertible preferred stock to an affiliate of Tengram Capital Partners.
The proceeds of the Joe’s brand asset sale will be used to retire debt, including the term loan. Once the merger with RG Parent closes, the revolver will be repaid as well as some debt owed to the holders of Joe’s Jeans’ convertible notes.
The asset sale is expected to close by Sept. 30. Once it does, Joe’s Jeans will be renamed Differential Brands Group Inc. The merger with RG Parent is expected to close during the fourth quarter of 2015.
Joe’s Jeans is a Commerce, Calif.-based apparel company.
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