Liz Claiborne Inc. has entered into an agreement to sell substantially all of the assets and liabilities of prAna to prAna Living, LLC, a company formed by prAna's management team and Steelpoint Capital Partners for a purchase price consisting of a $36.5 million cash payment payable at closing and a contingent cash payment of up to $4.0 million based on actual 2008 EBITDA. Liz Claiborne expects to realize net cash proceeds of $18.1 million at closing as a result of the sale, after settlement of a contingent earnout obligation of $18.4 million payable to the prAna founders in connection with the 2005 acquisition of prAna. This $18.4 million payment is expected to be recorded as a charge to first quarter 2008 earnings.
The transaction is expected to close in the first quarter of 2008. To ensure a smooth and orderly transition for retail partners, vendors and employees, the Company has agreed to provide certain transition services to prAna Living LLC.
Scott Tierney, Managing Director of Steelpoint Capital Partners said, “We are pleased to sponsor the management buyout of prAna. The Company's passionate founders, employees and customers have built a leading brand in the yoga and outdoor markets. With a committed capital partner, we believe prAna will continue to thrive as an independent company.”
Beaver Theodosakis, President and Founder of prAna commented, “The management team at prAna is excited for the future. We have found a great new partner with Steelpoint. Scott, Jim and the guys are enthusiastic about prAna and have the intellectual and financial capital to help shape the future of our brand. They have an excellent track record of helping businesses like ours and we look forward to collaborating with them to take prAna to the next level.”
William McComb, Chief Executive Officer of Liz Claiborne Inc., commented, “We were pleased with the interest that prAna generated with potential buyers. Steelpoint is the right partner to help prAna realize its potential and flourish as a brand.”
Liz Claiborne Inc. has concluded the strategic reviews of 13 of the 16 brands it had placed under review. The strategic review of the remaining brands — Ellen Tracy, Kensie, and Mac & Jac — is on schedule to be completed by the end of the first quarter of 2008.
