NexCen Brands Inc. said it agreed to sell its franchise businesses, which includes The Athlete's Foot and Shoebox New York, to an affiliate of private-equity firm Levine Leichtman Capital Partners for $112.5 million.
NexCen's other franchises include the Great American Cookie, MaggieMoo's, Marble Slab Creamery, Pretzelmaker and Pretzel Time.
NexCen, which began exploring strategic alternatives in February amid falling sales and a cash shortfall, said part of the proceeds of the buyout would be paid to its lender, BTMU Capital Corp., to satisfy the company's debt. Over the past two years, NexCen has overhauled its management and restructured its debt after facing a liquidity crisis in 2008 related to its $93.7 million purchase of Great American Cookie.
The sale also includes its franchise management operations in Norcross, Ga., and a manufacturing facility in Atlanta. Chris Dull, president of NexCen Franchise Management, is expected to continue in his role under the new ownership. The deal is subject to approval by NexCen shareholders and is expected to close in Q3 2010.
All of NexCen's brands will be operated as a single business by Levine Leichtman's subsidiary, Global Franchise Group LLC, the companies said. NexCen franchises more than 1,700 stores across all of its brands.
Levine Leichtman's investment portfolio currently includes restaurant brands Beef 'O' Brady's and Wetzel's Pretzels, and past investments include Quiznos and CiCi's Pizza.
“We believe that this agreement with an affiliate of LLCP, a firm with a proven track record of success in franchise management and extensive capital resources, represents the most favorable option for all of our stakeholders,” Kenneth Hall, NexCen's CEO, said in a statement.
