With the announcement of its fourth fiscal quarter and year ended June 30, 2014, financial results, Elizabeth Arden Inc. also announced that investment funds affiliated with Rhône Capital have agreed to purchase $50 million of redeemable preferred stock of Elizabeth Arden and also will receive warrants to purchase 2.5 million shares of the company’s common stock at an exercise price of $20.39 per share, representing approximately 7.6% of the company’s outstanding common stock on an as-exercised basis.
Rhône Capital also has advised Elizabeth Arden that, subject to market conditions and applicable legal or regulatory approvals, it intends to increase its ownership of the company’s common stock over time. Rhône Capital has agreed to enter into a standstill with Elizabeth Arden, pursuant to which it will not acquire more than 30% of the company’s common stock after giving effect to the exercise of the warrants. Dividends on the preferred stock will be payable at a rate of 5% annually.
M. Steven Langman, co-founder of Rhône Capital, commented, “Having assessed the opportunity, and focused on the market positioning of Elizabeth Arden, the quality and potential of Elizabeth Arden’s brand portfolio, and the quality of the company’s management team, we firmly believe that this represents a unique investment opportunity to partner with a proven entrepreneurial organization and help them achieve their ambition to be a leader in the global beauty industry.”
E. Scott Beattie, chairman, president and CEO of Elizabeth Arden, added, “I am very excited to have Rhône Capital as an equity partner, to support the turnaround of our business in the short-term and the continued global growth and development of our brands and organization in the future. I am confident that we have a compelling business plan to improve the company's performance. Rhône Capital’s investment and commitment to Elizabeth Arden in light of its significant experience in our industry is evidence that Rhône Capital shares our optimism and belief in the outlook for the company."
Rhône Capital is an investment firm focused on global investments in businesses with international presence and global scale, with particular expertise in the consumer product, retail and beauty sectors and with a track record of adding value in public companies as a minority investor. In connection with its investment, Rhône Capital has the right to designate one member to Elizabeth Arden’s board for so long as it maintains its initial percentage interest in the company, and the right to designate an additional member in the event that Rhône Capital acquires an ownership stake in the company’s common stock of 20% or more on a fully diluted basis.