NexCen Brands, Inc., the parent of The Athlete's Foot, announced that two independent proxy advisory firms, Glass Lewis & Co. and ISS Proxy Advisory Services (ISS), recommend that NexCen Brands' shareholders vote “FOR” the sale of its franchise business to an affiliate of Levine Leichtman Capital Partners (“LLCP”), as well as “FOR” the additional proposals in the Company's June 11, 2010 proxy statement.
Nexcen said the analyses and recommendations of ISS and Glass Lewis & Co are relied upon by hundreds of major institutional investment firms, mutual funds and fiduciaries.
David S. Oros, Chairman of Board of Directors of NexCen Brands, Inc., stated, “We are extremely pleased that, in addition to ISS' recommendation, Glass Lewis also has issued a recommendation in favor of the items outlined in our 2010 proxy. The support of these highly respected firms independently validates that the proposed sale of our business to an affiliate of LLCP represent the most favorable option for all of our stakeholders. As such, we continue to urge NexCen Brands' shareholders to vote “FOR” all four of the proposals.”
In recommending that NexCen shareholders vote “FOR” the proposed asset sale and dissolution, Glass Lewis stated:
— The NexCen “board conducted a thorough evaluation of strategic alternatives that involved multiple interested parties prior to entering into the [asset sale] agreement.”
— “If the asset sale is not completed, it appears that shareholders may receive little or no value at all from any remaining alternatives, such as bankruptcy protection.”
— “While it is never ideal for shareholders to be forced to undergo a liquidation/dissolution event, in light of the Company's limited alternatives and the anticipated cash distribution to shareholders, we believe the proposed asset sale and dissolution are in the best interest of shareholders.”*
Last week, ISS recommended its client vote “FOR” the asset sale and other proposals on the agenda. In its analysis, ISS concluded by stating that “non-approval of the liquidation transaction would likely result in foreclosure of NexCen's assets by its creditors or bankruptcy, both of which would wipe out shareholder value. Therefore, the asset sale and liquidation transaction is preferable.”*
As previously announced, under the terms of the sale agreement, LLCP's affiliate, Global Franchise Group, LLC, will acquire the subsidiaries of NexCen Brands that own the franchise business assets, the Company's franchise management operations in Norcross, Georgia, and its manufacturing facility in Atlanta, Georgia. As set forth in the Company's proxy statement, NexCen estimates that, assuming that the asset sale is completed on its current terms and the Company is dissolved, the cash proceeds ultimately available for distribution to the holders of NexCen common stock will be between $0.12 and $0.16 per share of common stock; however, NexCen is unable to predict the exact amount, nature and timing of any distributions to its shareholders. Closing of the sale is subject to various conditions, including approval of the shareholders of NexCen Brands. The transaction is expected to close promptly following the receipt of shareholder approval. Shareholders of record as of the close of business on June 4, 2010 are entitled to vote at the Company's July 29, 2010 Special Meeting of Stockholders.
NexCen Brands owns a portfolio of franchise brands that includes two retail franchise concepts: TAF(R) and Shoebox New York(R), as well as five quick service restaurant (QSR) franchise concepts: Great American Cookies(R), MaggieMoo's(R), Marble Slab Creamery(R), Pretzelmaker(R) and Pretzel Time(R).
