Cherokee Global Brands struck an agreement with Gordon Brothers that will give the company a new credit facility and potentially broaden licensing for its brands.

Under the agreement, Gordon Brothers Finance Co. replaces Cerberus Business Finance as the senior lender for Cherokee’s new $40 million three-year term loan and Cherokee increased its long term debt to $53.5 million from $45.2 million in a move that will bolster its liquidity by $5.5 million. Cherokee had been in discussion with Cerberus after violating a covenant governing a $5 million credit facility that required it have $2 million in liquidity. It had previously said it expected to reach an agreement with Cerberus. Gordon Brothers, along with some junior lenders, received warrants to buy 2.8 million Cherokee shares at 48 cents.

At the same time, Gordon Brothers Brands and Cherokee will work jointly to expand the roster of licensees for the companies’ brands. Gordon Brothers includes the Bench and Wet Seal brands in its portfolio, while Cherokee has its namesake label along with its Hi-Tec, Everyday California, Liz Lange, Tony Hawk, Sideout, 50 Peaks and Magnum banners. No timing has been set for when the new venture will land the first agreements and the companies will work on an “opportunity by opportunity basis,” Gordon Brothers’ Ramez Toubassy tells us.

“Where it makes the most sense we will assist each other,” Toubassy told us. “Hi-Tec could reignite dealer interest and the strategy of the alliance is to find ways we can work together,” says Toubassy.

The new pact comes as Cherokee seeks to secure additional licensing deals as it moves to replace those lost after DTRs ended at Target for the Cherokee and Liz Lange brands as well as Tony Hawk at Kohl’s. For its part, Gordon Brothers launched the brands group in 2016 to represent the firm in licensing after it acquired Toubassy’s Blast-Off Brands.

“We are now better positioned to realize the full potential of our high-growth brand opportunities with the support of this more focused and efficient infrastructure,” Cherokee’s Henry Stupp said in a statement.

Contacts:

Cherokee Global Brands, Henry Stupp, CEO, 818-908-9868 x200, henrys@cherokeeusa.com

Gordon Brothers Brands, Ramez Toubassy, Pres., 310-243-6766, rtoubassy@gordonbrothers.com