Centric Brands Announces Confirmation of Plan of Reorganization

Centric Brands LIcensing International Michael Kors, Disney
  • Court approves plan to recapitalize and significantly reduce debt and interest payments, positioning the Company for long-term growth
  • Expects to emerge from Chapter 11 by the end of October as a private company poised for long-term growth with the support of Blackstone, Ares Management Corporation, and HPS Investment Partners

New York, NY – Centric Brands Inc. (OTCBB: CTRCQ) (the “Company”), a leading lifestyle brands collective, announced that the United States Bankruptcy Court for the Southern District of New York issued a ruling confirming the Company’s Plan of Reorganization (the “Plan”). The Plan was supported by the Company’s secured lenders and the Unsecured Creditors’ Committee. After all conditions have been finalized, the Company intends to emerge from Chapter 11 by the end of October with a recapitalized balance sheet, new financing facilities, significantly reduced debt and interest payments, and the full support of its lenders.

“Today’s announcement represents a critical moment in our journey to emerge as an even stronger company, poised for long-term growth. I am truly grateful to our dedicated employees for their hard work throughout this process and the COVID-19 pandemic. I’m also appreciative of the continued support of our brand licensors, retailers, sourcing network and lenders, which has allowed us to reach this milestone,” said Mr. Jason Rabin, CEO of Centric Brands.

Mr. Rabin continued: “We continue to execute against our strategy while maintaining our valued, long-standing relationships with our business partners. With a strengthened financial position, I am excited about our strong future ahead.”

Centric Brands expects to emerge as a private company, under the supportive ownership of its current lenders led by Blackstone, Ares, and HPS. Upon emergence, the Company expects to substantially reduce its funded second lien indebtedness, thereby positioning the business for future growth and success. Blackstone will exchange its second lien debt for equity interests in the reorganized company. Existing senior lenders Ares and HPS will retain their senior loan positions and will receive equity interests in the reorganized company.

Further, as contemplated under the terms of the Plan, the Company expects to secure new exit financing in the form of a new securitization facility, as well as new revolving and term loan facilities from its current secured lenders, which will help fund the Company’s exit from Chapter 11 and its go-forward operations.

Additional Information
Ropes & Gray LLP, PJT Partners, Inc., and Alvarez & Marsal served as legal, financial, and restructuring advisor to Centric Brands.

Court filings and other documents related to the restructuring are available on a separate website administered by the Company’s claims agent, Prime Clerk at https://cases.primeclerk.com/centricbrands.

About Centric Brands Inc.
Centric Brands Inc. (the “Company”) is a leading lifestyle brand collective that designs, sources, markets and sells high quality products in multiple segments, including kids, men’s and women’s apparel, accessories, beauty, and entertainment. The Company’s portfolio includes more than 100 iconic licensed brands, including for kids apparel, Calvin Klein®, Tommy Hilfiger®, Nautica®, Spyder® and Under Armour®; for men’s and women’s apparel, Joe’s Jeans® and Buffalo®; for accessories, Kate Spade®, Michael Kors®, All Saints®, Frye®, Timberland® and Jessica Simpson®; and for entertainment, Disney®, Marvel®, Nickelodeon® and Warner Brothers®, among others. Owned brands include Hudson®, Robert Graham®, Swims®, Zac Posen® and Avirex®. The Company’s products are sold primarily in North America through leading mass market retailers, specialty, and department stores, and online. Centric Brands has unparalleled expertise in product design, development and sourcing, retail and digital commerce, marketing, and brand building. The Company is headquartered in New York City and has offices in White Plains, Los Angeles, Greensboro, N.C., Toronto, and Montreal. For more information about Centric Brands please visit https://www.centricbrands.com.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The matters discussed in this news release involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. All statements in this news release that are not purely historical facts are forward-looking statements, including statements containing the words “may,” “will,” “expect,” “anticipate,” “intend,” “estimate,” “continue,” “believe,” “plan,” “project,” “will be,” “will continue,” “will likely result” or similar expressions. Any forward-looking statement inherently involves risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to: the ability to continue operating in the ordinary course and meets its financial obligations; risks related to the Company’s ability to implement successfully any growth or strategic plans; risks related to COVID-19’s impact on the economy and the Company’s cash flows as a result of government mandated closures of our retail stores, wholesale partners and disruptions in the supply and distribution chain; the highly competitive nature of the Company’s business in the United States and internationally and its dependence on consumer spending patterns, which are influenced by numerous other factors; the Company’s ability to respond to the business environment and fashion trends; continued acceptance of the Company’s brands in the marketplace; risks related to the Company’s reliance on a small number of large customers; risks related to the Company’s ability to manage the Company’s inventory effectively; risks related to the Company’s ability to continue to have access on favorable terms to sufficient sources of liquidity necessary to fund ongoing cash requirements of the Company’s operations; risks related to the Company’s pledge of all its tangible and intangible assets as collateral under its financing agreements; risks related to the Company’s ability to generate positive cash flow from operations; and other risks. The Company discusses certain of these factors more fully in its additional filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2018 and subsequent quarterly reports on Form 10-Q filed with the SEC, and this release should be read in conjunction with those reports, together with all of the Company’s other filings, including current reports on Form 8-K, through the date of this release. The Company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Since the Company operates in a rapidly changing environment, new risk factors can arise and it is not possible for the Company’s management to predict all such risk factors, nor can the Company’s management assess the impact of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company’s future results, performance or achievements could differ materially from those expressed or implied in these forward-looking statements. The Company does not undertake any obligation to publicly revise these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

Media
Edelman for Centric Brands
Arielle Patrick
Arielle.Patrick@edelman.com

Investors
Edelman for Centric Brands
Hunter Stenback
Hunter.Stenback@edelman.com

Source: Centric Brands Inc.

Released September 18, 2020

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