J. Crew Or Debt Restructuring

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Group Inc. may consider taking advantage of the low debt price at the time of debt restructuring to ease its current close to $2 billion in debt.

Debt research firm Debtwire broke up J. Crew Group Inc. last weekend before preparing for consultation with creditors or would like to make J. Crew Crew classic.

The intellectual property was split to a new subsidiary established in the Cayman Islands.

There have been rumors that the Madewell brand will be sold or stripped, and people familiar with the matter say that Madewell will not join the new subsidiary of J. Crew brand.

After the news, the debt of J. Crew Group Inc. plunged sharply, dropping from US $0.64 to US $0.50 per dollar.

J. Crew Group Inc. has a bond that matures in 2019. A source told reporters that the spin off of J. Crew brand IP IP will help the group raise new financing to redeem debt and repurchase bonds at a discount.

Leonard Green & Partners LP and TPG Capital LP acquired J. Crew Group Inc. in 2011 with leverage of US $3 billion.

According to website data, as of October 29th, the group's current liabilities and long-term liabilities were $460 million 800 thousand and $1 billion 497 million 300 thousand respectively, amounting to $1 billion 958 million 100 thousand, while cash was only $38 million 416 thousand, which was further reduced compared with $49 million 200 thousand as at July 30th.

Leonard Green & Partners LP is also a shareholder of Authentic Brands Group LLC (ABG), a brand management company.

ABG has submitted a listing application in a low profile in November.

The separation of intellectual property (IP) and retail assets has become a new trend in the retail industry this year.

This is due to ABG bankruptcy and the two largest retail and commercial real estate developers in the United States.

The acquisition of A & E ropostale Inc., the retailer, received ABG IP in the paction, while Simon Property Group Inc. (NYSE:SPG) Simon real estate group and General General (IP) saved the store of the bankrupt brand in its store.

Since then, the two bankrupt American Apparel LLC has also sold IP to the Canadian clothing manufacturer Gildan Activewear Inc. TSE:GIL (TSE:GIL), which clearly indicated that it would not take over the retail business.

However, the final fate of American Apparel LLC can only be decided after the bankruptcy auction in June January. It is expected that the brand management companies such as ABG will participate in the auction.

If the intellectual property rights of J. Crew brand are split up, the new company may sell agent to J. Crew Group Inc., the real operator of the brand, to gain profits.

According to the relationship between J. Crew Group Inc. - Leonard Green & Partners LP - ABG, the market even speculated that the ABG will be bought or sold after the listing, so that it can reduce the debt and reduce the loss as far as possible.

But there are investment bankers who believe that splitting J. Crew brand IP is equivalent to shred the value of J. Crew Group Inc., which is the same as the way in which the radical fund oppresses Macy, s Inc. (NYSE:M), Messi department store and other retailers to spin off real estate for maximum value.

On the other hand, last week, the news came from the US "retail Godfather", chairman of J. Crew Group Inc., chief executive Millard "Mickey" Drexler, or letting CEO job.

This further reveals from the side that Millard Drexler does not seem to be able to reverse the current plight of J. Crew Group Inc..

According to the world clothing and shoe net, Millard Drexler will resign as CEO, but the successor is still looking for it, and he will not quit the company entirely.

Millard Drexler holding J. Crew Group Inc. 10% will continue to chair the position to ensure smooth pition of the company.

The potential debt restructuring will win more time for the recovery of J. Crew Group Inc..

Data show that although J. Crew Group Inc. narrowed its losses in the last three quarters, its revenue continued to decline. The group warned that the current holiday season will continue to be challenged by passenger flow and the impact of a highly promotional environment.

In the three quarter, the group's revenue decreased by 4.2% to 593 million 200 thousand US dollars a year, of which the J. Crew brand was reduced from 7.4% to 488 million US dollars. Madewell's brand continued to grow strongly, with revenue rising 11.8% to 87 million 968 thousand US dollars, accounting for 14.8% of the group's revenue.

Sales in the same period were improved over the same period last year. The overall sales decline of 8% in the same store was narrowed by 11% compared to the same period last year. The decline in J. Crew brand decreased from 12% to 9%, while the growth of Madewell brand increased from 1% to 4%.

The net loss in the three quarter was US $7 million 900 thousand, compared with a huge loss of $759 million 700 thousand in the same period last year because of the $845 million 900 thousand J. Crew brand reduction.

From the same period last year, a loss of $808 million 500 thousand turned to a profit of 19 million 976 thousand US dollars.

Gross margins fell 50 basis points to 38.1%.

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