Francesca’s will auction core stores thisweek
Francesca’s Holdings Corp. will move forward with an auction after clearance from the U.S. Bankruptcy Court for the District of Delaware, which authorized the move Friday.
The auction is scheduled for this Friday, the company said in an email. The company also said it’s holding off on plans to close its corporate offices in Houston and lay off hundreds of local employees.
The Houston-based women’s clothing retailer announced a plan to auction off its core retail locations when it filed for bankruptcy protection last month. At the same time, the company reached an agreement with Tiger Finance, an existing lender, for a $25 million debtor-in-possession financing facility thatwould allow it to continue operations. It also entered into a letter of intent with TerraMar Capital, a Los Angeles investment firm that provides debt and equity capital to middlemarket businesses.
Francesca’s announced Friday that it executed the stalking horse agreement with TerraMar’s affiliate, Francesca’s Acquisition, and with Tiger Capital Group. The minimum bid for company assets and subsidiaries is set at $17 million cash. The transaction is subject to court approval, the company said. Other bids must be submitted by Wednesday.
The company foreshadowed the shuttering of its Clay Road office lastmonth in a notification to the Texas Workforce Commission, telling the agency it planned to lay off 223 employees by Jan. 31. The company said Monday that it issued the notification to be compliant with regulations but that the plans are not set in stone.
“Since filing for bankruptcy, we have not had any layoffs or closed our headquarters,” it said. “Following Friday’s auction, we look forward to new ownership who will help us continue to provide our customers with a unique, fun and personalized shopping experience.”
Interested bidders could make offers on individual retail locations or offer to buy assets as a package deal, depending on how negotiations pan out, said Venky Shankar, research director for Texas A&M’s Center for Retailing Studies. The assets could have value for other clothing retailers and private equity firms, Shankar said. Larger mall owners such as Simon Properties and Brookfield Properties may also be interested.
“They may have to close down locations because there may not be any takers,” Shankar said.
Francesca’s already planned to close some 237 stores as part of its restructuring. At the time of its last quarterly report, for the period ended Aug. 1, the company had 700 stores.