Nine West Holdings files bankruptcy to facilitate sale of business

By Caroline Salls

Pittsburgh, April 6 – Nine West Holdings, Inc. filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the Southern District of New York to facilitate the sale of its Nine West and Bandolino footwear and handbag business and to right-size its capital structure around its profitable and growing businesses, including One Jeanswear Group, Jewelry Group, Kasper Group and Anne Klein, according to a news release.

In conjunction with the restructuring, the company said it received $300 million in debtor-in-possession financing, and it has entered into a restructuring support agreement with parties that hold or control more than 78% of its secured term debt and more than 89% of its unsecured term debt.

Nine West said the financing, combined with cash generated from operations, will provide it with the liquidity necessary to maintain its operations in the ordinary course during its Chapter 11 case.

The terms of the DIP financing had not yet been filed as of Friday evening.

Stalking horse agreement

The company said it has entered into a stalking horse asset purchase agreement with Authentic Brands Group, and the sale will be subject to a competitive sale process.

The stalking horse purchase agreement provides the commitment by Authentic Brands to pay $200 million for the intellectual property associated with the Nine West, Bandolino and associated brands and some working capital assets.

Nine West Holdings said it is expected to retain about $30 million to $40 million of accounts receivable under the stalking horse agreement.

The purchase price associated with the purchased intellectual property is $123 million, establishing a baseline bid, the company said.

“This is the right step to address our two divergent business profiles,” Nine West chief executive officer Ralph Schipani said in the release.

“We will retain our strong, profitable and growing apparel, jewelry and jeanswear businesses and continue to operate them under a new capital structure so that we can leverage their existing strengths to drive even greater growth.

“Once we complete the reorganization process, our company will have meaningfully reduced debt and interest costs and be well positioned for the future.”

Restructuring terms

Under the restructuring support agreement, holders of secured term loan facility claims will be paid in full in cash, but with the waiver of default interest.

Holders of an unsecured term loan facility will receive new second-lien debt and 100% of the equity in the reorganized Nine West debtors, subject to dilution by any management equity incentive plan and less any distributions of new equity made to holders of other unsecured claims.

Other unsecured creditors will generally receive their entitlements under the Bankruptcy Code in the form of consideration reasonably agreed among the debtors and the requisite consenting creditors under the unsecured term loan facility.

Existing equity interests will be discharged, cancelled, released and extinguished.

The company’s post-emergence capital structure is expected to include an up to $275 million asset-based revolving credit facility, a $350 million first-lien senior secured term loan facility, a $150 million second-lien senior secured term loan facility and equity in a new parent corporation.

Nine West said it is seeking court approval of customary first-day motions that will allow it to smoothly transition its business into Chapter 11, including granting authority to pay wages and benefits, honor programs with retail partners and customers and pay vendors and suppliers in the ordinary course for all goods and services provided on or after the filing date.

Debt details

According to court documents, Nine West Holdings has $500 million to $1 billion in assets and $1 billion to $10 billion in debt. Specifically, as of Friday, the company said it had $1.6 billion in total funded debt obligations.

The company’s largest unsecured creditor is U.S. Bank NA of Hartford, with a $446.33 million 8¼% unsecured notes claim, a 6 1/8% unsecured notes claim and a 6 7/8% unsecured notes claim.

Other unsecured creditors with claims of $1 million or more are Morgan Stanley Senior Funding, Inc. of New York, with a $305.1 million unsecured term loan claim; Surefield Ltd. of New York, with a $17.58 million trade claim; Stella International Holdings Ltd. of Macau, with a $12.48 million trade claim; Pavilion Investments Ltd. of New York, with a $6.09 million trade claim; Wide Rise Ltd. of Foshan, China, with a $5.59 million trade claim; Hongkong Hing Wing Development Ltd. of Hong Kong, with a $5.27 million trade claim; and Classic Fashion Apparel Industry Ltd. of Irbid, Jordan, with a $5.04 million trade claim.

Jasper Parent LLC holds 100% of Nine West Holdings’ equity interests.

The company’s legal adviser is Kirkland & Ellis LLP, its financial adviser is Lazard Freres & Co. and its restructuring adviser is Alvarez & Marsal North America LLC.

Nine West is a New York-based designer, marketer and wholesaler of apparel, footwear and accessories. The Chapter 11 case number is 18-10947.

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