Centric Brands has voluntarily filed for Chapter 11 bankruptcy in efforts to significantly reduce debt and interest payments.
According to the company, it has entered into a restructuring support agreement (RSA) with its secured lenders led by certain funds managed by Blackstone, Ares Management Corporation and HPS Investment Partners. The RSA is meant to recapitalize Centric Brands, provide $435 million in debtor-in-possession financing and allow Centric Brands to operate without interruption throughout the restructuring process.
The agreement also intends to create a plan to substantially reduce Centric Brands’ funded second lien indebtedness by approximately $700 million. Under the terms of the RSA, Centric Brands expects to emerge from Chapter 11 as a private company.
Jason Rabin, CEO of Centric Brands, said, “The current crisis has significantly impacted companies across all sectors. The pandemic disrupted many of our wholesale accounts’ ordering and constrained our cash flow. However, we are confident that with added flexibility in our capital structure, we will be well-positioned for long-term success during this period and beyond. We thoroughly evaluated all possible strategic options to address this environment. After extensive review, we determined that partnering with our current lenders to pursue this path will result in a stronger financial position and more resources to support future growth, while allowing us to focus on serving key stakeholders.”
Centric Brands’ licensed beauty portfolio includes:
- Build-a-bear Workshop
- Entertainment One
- Feisty Pets
- Girl Scouts
- Moose Toys
- Spin Master
- The Elf on the Shelf
- Warner Brothers