Vince LLC (VNCE) recently entered into a strategic partnership with Authentic Brands Group, LLC (ABG), a global brand development, marketing, and entertainment platform. The partnership involves Vince contributing its intellectual property to a newly formed ABG subsidiary (ABG Vince) for total consideration of $76.5 million in cash and a 25% membership interest in ABG Vince. Through this agreement, Authentic will own the majority stake of 75% membership interest in ABG Vince. The Asset Sale was closed on May 25, 2023.
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Vince LLC to Use Cash Proceeds to Prepay Debt
Vince LLC will use the cash proceeds from the Asset Sale to prepay its outstanding amounts of $28,724, including accrued interest and a prepayment penalty of $553, under the Term Loan Credit Facility, which was then terminated. Additionally, the company repaid $850 of fees due in accordance with the TL First Amendment.
License Agreement between Vince LLC and ABG-Vince LLC
In connection with the Authentic Transaction, Vince LLC entered into an exclusive, long-term License Agreement with ABG-Vince LLC. This agreement provides Vince LLC with a license to use the Licensed Property in the Territory to the Approved Accounts. The initial term of the License Agreement begins on May 25, 2023, the date on which the Closing actually occurred, and ends at the end of the Company’s 2032 fiscal year.
Royalty Payments and Commitments
Vince LLC will pay royalties comprised of a low single-digit percentage of net sales arising from retail and e-commerce sales of Licensed Products and a mid single-digit percentage of net sales arising from wholesale sales of such licensed products. The company has also committed to an annual guaranteed minimum royalty of $11,000 and annual minimum net sales as specified in the License Agreement.
Transaction-Related Expenses
The company anticipates incurring total transaction-related expenses of approximately $6,000, of which $2,741 was incurred during the three months ended April 29, 2023.
About Vince
Vince is a leading global luxury apparel and accessories brand known for creating elevated yet understated pieces for everyday effortless style. The company operates 50 full-price retail stores, 17 outlet stores, its e-commerce site, vince.com, as well as through premium wholesale channels globally.
Strategic Partnership and Future Growth
Vince’s partnership with Authentic Brands Group and the closing of the Asset Sale mark an important milestone for the company. This strategic partnership is expected to strengthen Vince’s brand positioning and provide further opportunities for growth and expansion in the future.
Note that we may hold securities mentioned in this article. The source of this article are the SEC filings available at https://www.sec.gov/Archives/edgar/data/1579157/000095017023027589/vnce-20230429.htm that we extracted with the help of various software tools. Even though we have implemented various fact-checking processes, some incorrect information may have remained in the article (false positive). Let us know if you find any inconsistencies!