Joe's Jeans Inc. (DFBG)

[AntiMarketMaker]

on Nov. 24, warning that if it didn't meet the minimum closing bid price of $1 by May 26, it would be delisted. On May 29, the company received a second letter extending the deadline to Nov. 23 of this year. Joe's stock was down 1.52% to 18 cents in after-hours trading Wednesday.

In February, Los Angeles-based Joe's disclosed that it hired Carl Marks Advisory Group LLC to explore options, including a potential sale or restructuring, after it defaulted on its roughly $90 million debt load, according to filings with the Securities and Exchange Commission.

Joe's had been in default since November with senior lender Garrison Loan Agency Services LLC. The company holds a roughly $59.1 million facility with Garrison, and the violation also caused a default on its revolver with CIT Commercial Services Inc. As of Feb. 28, Joe's had drawn about $23.8 million from the revolver, and about $11.6 million was available. The company had a cash balance of $1.1 million as of that date.

Joe's took on substantial amounts of debt in 2013 when it acquired fellow jeans retailer Hudson Clothing from private equity firm Fireman Capital for $97.6 million, which included cash, debt and $22.9 million in convertible bonds.

In Joe's last filing period, which ended Feb. 28, the company had about $43 million in net sales, compared with $47.3 million for the same period last year.

The marriage between Joe's and Hudson hasn't always been a smooth one. Shortly after Joe's hired Carl Marks Advisory, Peter Kim, the founder of Hudson, said he was resigning from Joe's board, although he would keep his post as chief executive of Hudson. Mr. Kim had "expressed concerns about the Company's financial situation and the need for a plan to assess the Company's options as soon as possible," according to an SEC filing.

Separately, Mr. Kim retained Sullivan & Cromwell LLP and B. Riley & Co. as his advisers.

If a sale of the company were to close, Tengram's portfolio company, Robert Graham Designs LLC, likely would merge with Hudson, the people said.

Tengram has plenty of money to finance a deal. Last week, the Westport, Conn., firm held a first and final close of its latest fund, Tengram Capital Partners Fund II LP at $320 million. The firm also announced the acquisition of Italian menswear brand Zanella, which was the last investment from its debut fund.

Earlier this week, Sequential Brands Group Inc., backed by Tengram and Carlyle Group, reached a deal to buy Martha Stewart Omnimedia Inc. for $353 million.


Write to Lillian Rizzo at [e-mail] and Amy Or at [e-mail]


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June 25, 2015 08:00 ET (12:00 GMT)


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