Steelpoint Capital Partners has completed its acquisition of prAna from Liz Claiborne Inc. (NYSE: LIZ). The deal included a $36.5 million cash payment at closing, and up to $4 million in financial milestone-based earnouts. PrAna is a Vista, Calif.-based maker of yoga and active lifestyle apparel and accessories.
ORIGINAL PRESS RELEASE
Today Liz Claiborne Inc. (NYSE: LIZ) announced the conclusion of its strategic review of prAna. The company has entered into an agreement to sell substantially all of the assets and liabilities of prAna to prAna Living, LLC, a company formed by prAna's management team and Steelpoint Capital Partners (“Steelpoint”) for a purchase price consisting of a $36.5 million cash payment payable at closing and a contingent cash payment of up to $4.0 million based on actual 2008 EBITDA. Liz Claiborne expects to realize net cash proceeds of $18.1 million at closing as a result of the sale, after settlement of a contingent earnout obligation of $18.4 million payable to the prAna founders in connection with the 2005 acquisition of prAna. This $18.4 million payment is expected to be recorded as a charge to first quarter 2008 earnings.
The transaction is expected to close in the first quarter of 2008. To ensure a smooth and orderly transition for retail partners, vendors and employees, the Company has agreed to provide certain transition services to prAna Living LLC.
Scott Tierney, Managing Director of Steelpoint Capital Partners said, “We are pleased to sponsor the management buyout of prAna. The Company's passionate founders, employees and customers have built a leading brand in the yoga and outdoor markets. With a committed capital partner, we believe prAna will continue to thrive as an independent company.”
Beaver Theodosakis, President and Founder of prAna commented, “The management team at prAna is excited for the future. We have found a great new partner with Steelpoint. Scott, Jim and the guys are enthusiastic about prAna and have the intellectual and financial capital to help shape the future of our brand. They have an excellent track record of helping businesses like ours and we look forward to collaborating with them to take prAna to the next level.”
William McComb, Chief Executive Officer of Liz Claiborne Inc., commented, “We were pleased with the interest that prAna generated with potential buyers. Steelpoint is the right partner to help prAna realize its potential and flourish as a brand.”
Liz Claiborne Inc. has concluded the strategic reviews of 13 of the 16 brands it had placed under review. The strategic review of the remaining brands — Ellen Tracy, Kensie, and Mac & Jac — is on schedule to be completed by the end of the first quarter of 2008.
Based in North San Diego County (Vista), California and established in 1993, prAna is a designer, marketer and wholesaler of climbing, yoga and outdoor/active lifestyle apparel and accessories. PrAna is rooted in serving the core customer, designing products with technical features for performance but with the style and comfort to cross over into everyday life. PrAna's product line includes a full line of men's and women's sportswear, performance tops and bottoms, and accessories. For more information visit www.prana.com.
About Liz Claiborne Inc.
Liz Claiborne Inc. designs and markets an extensive range of branded women's and men's apparel, accessories and fragrance products. The Company's diverse portfolio of quality brands — available domestically and internationally via wholesale and retail channels — consistently meets the widest range of consumers' fashion needs, from classic to contemporary, active to relaxed and denim to streetwear. For more information, visit www.lizclaiborneinc.com.
About Steelpoint Capital Partners
Steelpoint Capital Partners is a private equity firm that specializes in growth capital and management buyouts. With offices in New York and San Diego, the firm invests in expansion stage companies in the information technology, media and marketing services, healthcare and consumer markets. Steelpoint's team draws on extensive operating and investment experience to provide value- added support to portfolio companies and their management. Representative investments in the consumer and retail sectors include: Jitterbug, Kid Robot, Wild Brain, Bag Borrow or Steal, PRN, EAS and Naked Juice. For more information visit www.steelpointcp.com.