Off-price retailer Gabe’s has new owners; avoids bankruptcy
With the support of a group of its existing lenders, West Virginia-based Gabe’s has emerged from an out-of-court restructuring under new ownership.
The off-price retailer, which operates approximately 160 stores across 20 states, said it successfully closed a strategic transaction with a “highly supportive group” of its existing investors. The investors, which include Brigade Capital Management, Arbour Lane Capital Management and Anchorage Capital Advisors, converted more than 75% of Gabe’s outstanding term loan obligations into equity, acquiring it from private equity firm Warburg Pincus. (The firm acquired Gabe’s in 2016 from Alvarez & Marsal Capital.)
Additionally, the retailer has secured an infusion of new capital to support go-forward operations and strengthen relationships with vendor partners.
In connection with the deal, Gabe’s said it reached mutually-beneficial agreements with more than 1,000 vendor partners to ensure that the company’s relationships support its long-term growth and a healthy merchandise mix. The company also said it completed “constructive “negotiations with many of its landlords and is finalizing further agreements with certain strategic leaseholder partners as part of this optimization process to build a more resilient and “future-facing” store portfolio.
“With a stronger balance sheet, renewed vendor relationships, and more efficient operations, Gabe’s is poised for success and to continue providing customers with the brands they want at prices they love,” said Jason Mazzola, CEO of Gabe’s. “We’re incredibly grateful to our valued team members for their continued dedication, and to our investors, vendors and landlords for their committed partnership during this process and confidence in our future.”
The transaction was completed with the full support of the company’s new majority owners. Second Avenue Capital Partners and Ares Credit funds will continue to provide an ABL facility to the Company.
Advisors
Kirkland & Ellis LLP served as legal advisor, BRG served as financial advisor, Jefferies LLC served as investment banker, Hilco served as real estate advisor, and C Street Advisory Group served as strategic communications advisor to Gabe’s.
Debevoise & Plimpton LLP served as legal advisor, Houlihan Lokey served as investment banker, and Arize served as retail advisor to an ad hoc group of term lenders. Wachtell, Lipton, Rosen & Katz served as legal advisor to the ABL administrative agent.
