The Rockport Company’s stalking horse bidder in its bankruptcy auction has signed a purchase agreement (Agreement) that sets the value of the company’s intellectual property (IP) and buyer’s right to purchase the company’s equity interest in The Rockport Company Korea LTD, Calzados Rockport S.L., RIL and The Rockport Company, Portugal, Unipessoal, Lda., and puts in place a formula for valuing inventory purchased at closing.

ABG-Regatta LLC and ABG Intermediate Holdings, affiliates of Authentic Brands Group (Authentic), were identified as the so-called stalking horse bidder for The Rockport Company (Rockport) in Bankruptcy Court filings on June 21 and obtained by SGB Executive. The buyer made a $5.3 million deposit into an escrow account in conjunction with the Agreement.

The Agreement has Authentic paying $40.4 million for the Rockport IP, another $5 million for the Korean subsidiary, if rights are exercised, and $100,000 for the Iberian subsidiary, which includes the Spain and Portugal entities, if exercised. The purchase amounts are subject to a range of other criteria that will increase or decrease the value of the purchase price. In addition to formulas for valuing inventory to be purchased, the Agreement also lays out formulas for the assumption of leases, purchase of non-inventory assets such as warehouse fixtures and other equipment and assumption of other assets, liabilities and contracts.

The Agreement sets a break-up fee equal to $1.59 million payable to Authentic if Rockport closes on an alternative transaction and expense reimbursements of up to $1.0 million to Authentic for actual and reasonable out-of-pocket third-party expenses and costs incurred in negotiating the Agreement and conducting diligence in the pursuit of the Agreement.

A transition services agreement (TSA) was also included in the June 21 filing, setting monthly fees to be paid by Authentic to Rockport or to pass through to a third-party provider. Rockport is required to provide Authentic access to functional department heads to Authentic no later than 72 hours of acceptance of the TSA.

The TSA designates the following service fees by department. The monthly fee amount for employees is said to be based on the current roster and will change based on retained employees:

  • Accounting and Finance: Nine (9) employees are estimated at $84,966 per month on average;
  • Accounts Receivable: Eight (8) employees, estimated at $29,109 per month on average;
  • Accounts Payable: Three (3) employees, estimated at $13,111 per month on average;
  • Customer Service: Eleven (11) employees, estimated at $74,877 per month on average;
  • Inventory: Two (2) employees, estimated at $26,716 per month on average;
  • Logistics: Nine (9) employees, estimated at $47,066 per month on average. Fixed Fees are estimated to be $555,811 per month on average for storage and a variable per unit cost for the distribution center is estimated to be $1.94 on a pass-through basis;
  • North America Sourcing: Fourteen (14) employees, estimated at $180,949 per month on average plus fixed fees estimated to be $35,983 per month on average;
  • E-commerce and Digital Marketing: Seventeen (17) employees, estimated at $96,237 per month on average plus fixed fees estimated to be $169,781 per month on average and variable costs estimated to be $490,062 per month on average;
  • Information Technology: Six (6) employees, estimated at $40,719 per month on average plus fixed fees estimated to be $335,524 per month on average;
  • Sales Support: Thirteen (13) employees, estimated at $186,093 per month on average plus fixed fees estimated to be $4,000 per month on average and variable fees estimated to be $170,845 per month on average;
  • Marketing: Ten (10) employees, estimated at $114,715 per month on average plus variable fees estimated to be $208,686 per month on average;
  • Product: Seven (7) employees, estimated at $103,656 per month on average plus fixed fees estimated to be $517 per month on average and variable fees estimated to be $83,593 per month on average;
  • Facilities: Two (2) employees, estimated at $20,023 per month on average plus fixed fees estimated to be $105,173 per month on average;
  • Contract Management: Two (2) employees, estimated at $18,143 per month on average plus fixed fees estimated to be $8,667 per month on average;
  • Brand Management: Three (3) employees estimated at $56,253 per month on average plus fixed fees estimated to be $500 per month on average;
  • Human Resources and Payroll: Four (4) employees, estimated at $36,728 per month on average variable fees on a pass-through basis.

Photo courtesy Rockport