Hartmarx signs $119 million deal for sale of substantially all assets

By Jennifer Lanning Drey

Portland, Ore., May 22 - Hartmarx Corp. has entered into a stalking horse asset purchase agreement with Emerisque Brands U.K. Ltd. and SKNL North America BV for substantially all of Hartmarx's assets, according to a news release.

Under the terms of the agreement, the stalking horse bidder will pay $70.5 million in cash, as well as a junior secured note with a face value of $15 million, subject to adjustment at the closing date for changes in the company's borrowing base.

Emerisque has also agreed to assume certain liabilities of Hartmarx estimated at $33.5 million.

"In this challenging economic environment, at the present time the Emerisque offer is the best and highest offer we have received and sets a baseline for a transaction to be completed consistent with our [debtor-in-possession] financing agreement," Homi B. Patel, chief executive officer of Hartmarx, said in the release.

"However, we will need continuing lender and other stakeholder support to meet the significant challenges of closing this or any alternative transaction."

Hartmarx and its advisors will continue to work with potential bidders to maximize value for all stakeholders, Michael Buenzow, Hartmarx's chief restructuring officer, said in the release.

Moelis & Co. LLC and FTI Consulting, Inc. are Hartmarx's financial advisers.

Bidding procedures

Under the proposed bidding procedures, competing bids are due by 5 p.m. ET on June 25.

If one or more competing bids are received, Hartmarx will hold an auction no later than July 6.

Hartmarx will pay a $1.65 million breakup fee and reimburse up to $2 million of Emerisque's related expenses if it chooses an alternative offer.

A hearing on the bidding procedures is scheduled for June 1, and the sale hearing will take place on July 9.

Hartmarx, a Chicago-based producer and marketer of business, casual and golf apparel, filed for bankruptcy on Jan. 23. Its Chapter 11 case number is 09-02046.

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