Mall Retailer Aeropostale Inc Shares Surge After Financing Secured

Investors just like the teenage customers of retailer Aeropostale Inc (NYSE:ARO) are a fickle lot. Last Friday, shares in Aeropostale took a beating giving up 24% of their value but the retailer has recovered a bit today after it announced a financing and strategic partnership with Sycamore Partners which specializes in retail investments and holds shares of Hot Topics, Talbots, and shoe companies Nine West and Stuart Weitzman.

The loans and sourcing agreement

The deal, which has been delayed and was planned for March, is comprised of  two separate loans. The first loan of $100 million will be paid over five years’ time while the remaining $50 million will have ten years until it needs to be repaid. The latter loan includes a sourcing agreement with Sycamore affiliate MGF Sourcing and has Aeropostale Inc (NYSE:ARO) agreeing to a minimum merchandise purchasing agreement which is expected to help Aeropostale diversify its apparel production. With the deal, Sycamore also has the right to acquire up to 5% of Aeropostale at an exercise price of $7.25. If Sycamore goes through with the purchase, it will be issued through convertible preferred stock.

Exclusive: York Capital to wind down European funds, spin out Asian funds

Jeffrey Aronson Crossroads CapitalYork Capital Management has decided to focus on longer-duration assets like private equity, private debt and collateralized loan obligations. The firm also plans to wind down its European hedge funds and spin out its Asian fund. Q3 2020 hedge fund letters, conferences and more York announces structural and operational changes York Chairman and CEO Jamie Read More


Company announces the deal

“The Board and management team are very pleased to have completed this transaction with Sycamore Partners,” said Aeropostale board chair Karin Hirtler-Garvey in a statement. The deal, she said, “which strengthens the Company’s financial position, broadens Aeropostale Inc (NYSE:ARO)’s already strong sourcing base, and provides additional runway for management to continue executing key strategic initiatives to reposition the Aeropostale brand.”

Additionally, Aeropostale Inc (NYSE:ARO) has appointed Stefan Kaluzny, managing director at Sycamore Partners, to its board of directors. While the deal has helped the stock price today, after Friday’s tumble the stock was down over 62% for 2014. Presently (3:50PM EDT), the stock is trading at $3.91 up $0.50 per share or 14.80%.