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Ann Taylor Parent Sells Catherines Brand for More Than Double the Initial Offer

Ascena Retail Group Inc. is selling its Catherines brand for more than double what it was initially offered.

In a filing with the United States Bankruptcy Court for the Eastern District of Virginia, the Ann Taylor and Lane Bryant parent announced a winning bid of $40.8 million from FullBeauty Brands Operations LLC for the plus-size chain.

At a bankruptcy auction on Wednesday, the New York-based FullBeauty Brands outbid stalking-horse bidder City Chic Collective Ltd. for Catherines’ intellectual-property assets and e-commerce business. The Sydney-headquartered City Chic originally offered $16 million for the assets and has been named the backup bidder following the auction with a $39.9 million offer.

Ascena — which also owns the Loft, Lou & Grey and Justice brands — filed for Chapter 11 protection two months ago as its business experienced severe disruptions stemming from the coronavirus pandemic. Amid government-mandated lockdowns, the retail group was forced to temporarily shutter nearly its entire fleet starting in mid-March. It implemented furloughs, reduced base salaries, cut back on advertising expenses, extended vendor payment terms and withheld rent payments in an attempt to preserve capital.

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“The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the COVID-19 pandemic,” Ascena interim executive chair Carrie Teffner said on July 23. “As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders.”

In its bankruptcy filing, Ascena announced that it had reached a restructuring agreement with 68% of its secured term lenders and received $150 million in new funds from its existing lenders. It intends to eliminate about $1 billion of its roughly $12.5 billion debt load, as well as plans to shutter all stores in Canada, Puerto Rico and Mexico, plus a “significant” number of Justice locations and a “select” number of Ann Taylor, Loft, Lane Bryant and Lou & Grey outposts.

In late July, reports emerged that Authentic Brands Group could be considering a buyout of Ascena through an investment alongside frequent buying partners Simon Property Group and Brookfield Property Partners. Private equity firm Sycamore Partners has also reportedly been mulling the purchase. (Ascena did not mention in court filings that the company itself was up for sale.)

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