Avenue Stores, a portfolio company of Versa Capital Management, has completed a recapitalization that provides capital to fund additional growth and to provide for a payment of a significant dividend to its shareholders. Following the recapitalization, Versa, along with management, continues to own 100% of the company’s equity interests. Versa and management acquired Avenue Stores through a bankruptcy transaction with United Retail Group in April 2012.
The financing was provided by JP Morgan Chase and Goldman Sachs and includes a $90 million term loan and revolving credit facility. The new financing leaves the previously debt-free company with only a modest amount of leverage and ample liquidity to support Avenue’s continued growth and expansion.
“In light of Avenue’s strong financial profile and the fact it had no prior borrowings, the company’s board determined that it would be prudent to capitalize on today’s historically low interest rates and deliver an attractive return to our investors, while ensuring that Avenue remained well-equipped to fund its ongoing expansion,” said Gregory Segall, CEO of Versa Capital and Chairman of Avenue Stores.
Avenue Stores is a specialty retailer targeting women between 25 and 55 years of age, wearing apparel sized 14 or larger. The company operates more than 280 stores across 35 US states and also sells online. Avenue Stores is based in Rochelle Park, NJ (www.avenue.com).
“We are pleased to have finalized this transaction, as it underscores the significant progress Avenue has made since its acquisition just over two years ago,” said Mr. Segall. “Working in close partnership with Avenue’s management team led by CEO Liz Williams, the company has been transformed into a vibrant enterprise achieving substantial growth in revenues, earnings and free cash flow, while accelerating its new store opening program.”
Versa Capital Management invests in special situations involving middle market companies with revenues in the $50 million to $1 billion range or assets of $25 million to $500 million. In addition to Avenue Stores, Versa’s portfolio includes retailers Bob’s Stores, Eastern Mountain Sports and Sport Chalet; restaurant chain Black Angus Steakhouse; community newspapers under Civitas Media; and manufacturers that service a variety of industries. The firm has $1.4 billion of capital under management and is based in Philadelphia (www.versa.com).
Avenue Stores was represented in the transaction by Sullivan & Cromwell and Stifel, Nicolaus & Company. The lenders were represented by Milbank, Tweed, Hadley & McCloy.
2014 PEPD • Private Equity’s Leading News Magazine • 10-30-14
