Golden Gate Capital has beaten CCMP Capital Advisors in a bankruptcy auction for the acquisition of clothing retailer Eddie Bauer with a $286 million bid.
CCMP had been the high bidder for the company since submitting a $202 million bid in June after Eddie Bauer filed for bankruptcy. CCMP was not willing to go any higher with its bid, a source said in an interview.
This is the second time Golden Gate has attempted to buy Eddie Bauer. The firm joined with Sun Capital Partners in 2006 on a $614 million bid to buy the company, but the offer was ultimately rejected by Eddie Bauer shareholders. The deal would have included debt of about $328 million.
Eddie Bauer’s reorganisation plan based on the Golden Gate deal will wipe out existing equity, the company said in a statement. The deal needs final approval from bankruptcy court.
Golden Gate will maintain the “substantial majority” of Eddie Bauer’s 371 stores and employees, the company said.
Eddie Bauer has a $100 million debtor-in-possession loan from CIT Group, GE Capital and Bank of America that allows the company to continue operating through the bankruptcy process. CIT Group has been struggling to stave off its own bankruptcy this past week, and it’s unclear what would happen to CIT’s portion of the DIP loan if the lender seeks protection under Chapter 11. A bankruptcy court could freeze CIT’s obligations in bankruptcy.
The company stumbled into bankruptcy in June after taking a $44.5 million loss in the first quarter, with revenues falling to $179.8 million from $213.2 million in the first quarter of 2008. Eddie Bauer tried to negotiate short-term covenant relief on some of its debt but was unable to reach agreements with lenders, forcing it into bankruptcy.
Golden Gate is investing its $1.8 billion second fund raised in 2004. The firm has about $9 billion under management and targets investments in technology, retail and financial services. The firm was formed in 2000 by former Bain professionals David Dominik and Jesse Rogers.
In June, the firm bought clothing brand J Jill from retailer Talbots for $75 million. Last year, Golden Gate bought restaurant chain Macaroni Grill for $132 million from publicly listed Brinker International.