Buyers will continue bankrupt Francesca’s operations
Francesca’s will remain operational after two investment firms bought the company’s assets in a bankruptcy auction and committed to maintaining stores, the retailer announced Tuesday.
Francesca’s Acquisition LLC, an affiliate of TerraMar Capital and Tiger Capital, was the winning bidder in a bankruptcy auction that began Friday. TerraMar, a Los Angeles investment firm, committed to operating “at least” 275 clothing stores — down from 700 in August.
Andrew Clarke, Francesca’s chief executive officer, said he was pleased with the arrangement.
“Upon court approval and the final closing of the transaction, we believe Francesca’s will emerge a stronger company,” he said, “poised to drive growth by exploring new brand avenues, expanding our ecommerce channels, and providing our customers with the latest fashion options and treasure hunt experiences they know and love.”
The Houston women’s clothing retailer announced a plan to auction its core retail locations when it filed for bankruptcy protection last month. At the same time, the company reached an agreement with Tiger Finance, for a $25 million debtor-in-pos
session financing facility that would allow it to continue operations.
It also entered into a letter of intent with TerraMar Capital to become the stalking horse bidder for the auction and sale process.
A stalking horse makes the initial bid to set the low-end of bidding.
Francesca’s announced earlier this month 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 was set at $17 million cash.
The company said there were multiple bidders but did not name them. The transaction is expected to close by the month’s end, subject to court approval.
Francesca’s struggles began before the pandemic, as women in their 20s and 30s have increasingly flocked to online retailers, brick-and-mortar competitors and independent boutiques.
The pandemic didn’t help the mall-based retailer.
The company reported a $17.2 million ($5.80 per share) loss in the period ended Aug. 1, compared to a $1.8 million (61 cents) profit during the same period in 2019.