Apparel company Apex Global Brands Inc.
will go private following its acquisition last month by Galaxy Universal, a wholesaling, sourcing and brand management company based in Centennial, Colo.Galaxy, which is privately held and focuses on the athletic, work and outdoor categories, will pay $2 a share for all outstanding shares of Apex, which trades on the over-the-counter market since being delisted from the Nasdaq in November. Shares closed Feb. 16, the day the acquisition was announced, at $2.59 – notably higher than the agreed-upon terms of the buyout.
Apex, which ditched its former moniker Cherokee Inc. in a 2019 rebrand, owns and manages a portfolio of clothing and footwear brands including Tony Hawk Signature Apparel, Hi-Tec, Interceptor, 50 Peaks, Liz Lange and Cherokee. The Sherman Oaks licensing company will become a wholly owned subsidiary of Galaxy when the transaction closes.Chief Executive Henry Stupp told the Business Journal he’s pleased Galaxy recognized the value of Apex’s brand portfolio.“We’ve been looking since spring of last year at different strategic alternatives, given the difficulties we had transitioning from former legacy partners,” he said. “It was challenging. It wasn’t the best time. We were under a fair amount of pressure because of our finances.”The company has struggled to post positive earnings in recent years. Some analysts in late 2019 predicted a Chapter 11 filing could be in the company’s future and speculated how long it could survive with its direct-to-retail licensing model.Stupp cited the decision by major retail partner Target Corp. in 2015 to not renew its licensing agreements with Apex as a factor in its declining performance, adding the company’s presence in international markets helped avoid a more dire outcome.“The fact that we’re global helped. We always had certain countries performing better than previously anticipated.”The company’s earnings report for the third quarter of fiscal year 2021, filed in December, indicates almost $46 million in outstanding debt was a factor in the sale.“The forbearance agreement with Apex’s lender accelerates the maturity date of its senior secured debt. … There is substantial uncertainty about the potential success of the company’s efforts to find strategic alternatives to provide liquidity to refinance the debt,” the company stated in its quarterly report.COVID-19, too, has taken a toll.For the quarter ended October 15, Apex posted a net loss of $6 million, or $10.58 a share, on revenue of $4.1 million. That’s a little better than in the same period in 2019, when it recorded a loss of $6.8 million, or $12.35 a share, on revenue of $4.9 million. Shares closed Feb. 24 at $2.30Stupp said Apex’s sale to Galaxy shouldn’t affect licensees and won’t disrupt operations – “It’s business as usual.”
Final Sale for Apex Global Brands
