Jones Apparel Group Agrees to Sell Barneys New York to Istithmar
June 22 2007 - 5:06PM
PR Newswire (US)
NEW YORK, June 22 /PRNewswire-FirstCall/ -- Jones Apparel Group,
Inc. (NYSE: JNY; the "Company" and "Jones") today announced that it
has entered into a definitive agreement to sell its wholly owned
subsidiary Barneys New York, Inc. ("Barneys") to an affiliate of
Istithmar, a Dubai based private equity and alternative investment
house ("Istithmar") for $825.0 million in cash, subject to certain
purchase price adjustments. Peter Boneparth, President and Chief
Executive Officer, Jones Apparel Group, Inc., stated, "We are very
pleased to enter into this transaction, which realizes significant
value for our investment in Barneys and provides us with the
opportunity to use the net proceeds to enhance shareholder value.
Furthermore, going forward, because the sale will reduce the level
of required capital expenditures we will have greater financial
flexibility in the execution of our business strategy." The Company
expects to report a net gain from this transaction of approximately
$290.0 million. In light of available tax benefits, the Company
anticipates net cash proceeds after taxes and transaction expenses
of approximately $770.0 million. These amounts are subject to
change, based on the actual balance sheet of Barneys at closing and
certain purchase price adjustments. The Company is considering
several alternatives for the use of the proceeds, including among
other things, the return of a substantial amount of capital to
shareholders, the repayment of some of its outstanding short- term
indebtedness and other uses consistent with the Company's business
strategy. The transaction will not result in a default under, or
obligation to redeem or repurchase, any of the Company's senior
notes. The transaction, which is expected to close in the third
quarter of 2007, is subject to certain customary conditions,
including the expiration or early termination of all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act.
Under the terms of the definitive agreement with Istithmar, Jones
is permitted to entertain unsolicited proposals from third parties
to acquire Barneys. Any such third party proposal would have to be
made by July 22, 2007 and all due diligence and negotiations with a
third party would have to be completed by August 11, 2007. Under
the terms of the definitive agreement, Jones remains permitted to
entertain proposals from third parties to acquire all of Jones
(including Barneys). In this circumstance, due diligence and
negotiations would also have to be completed by August 11, 2007. In
either case Jones would be required to pay a termination fee prior
to terminating its agreement with Istithmar. The termination fee
would be $20.6 million if Jones terminates the Istithmar agreement
on or prior to July 22, 2007 and $22.7 million if Jones terminates
after July 22, 2007. The detailed terms and conditions relating to
these rights of Jones are contained in the definitive agreement
regarding the sale of Barneys, which the Company will publicly file
with the SEC today. Goldman, Sachs & Co. acted as financial
advisor to the Company in connection with the transaction. The
Company will host a conference call with management to discuss this
transaction at 4:30pm eastern time today, which is accessible by
dialing 412-858-4600 or through a web cast at http://www.jny.com/.
The call will be recorded and made available through July 2, 2007
and is accessible by dialing 877-344-7529. Enter account number
408117. About Jones Apparel Group, Inc. Jones Apparel Group, Inc. (
http://www.jny.com/ ), a Fortune 500 company, is a leading
designer, marketer and wholesaler of branded apparel, footwear and
accessories. The Company also markets directly to consumers through
our chain of specialty retail and value-based stores, and operates
the Barneys New York chain of luxury stores. The Company's
nationally recognized brands include Jones New York, Evan-Picone,
Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Nine
West, Easy Spirit, Enzo Angiolini, Bandolino, Joan & David,
Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Kasper,
Anne Klein, Albert Nipon, Le Suit and Barneys New York. The Company
also markets costume jewelry under the Givenchy brand licensed from
Givenchy Corporation and footwear under the Dockers Women brand
licensed from Levi Strauss & Co. Each brand is differentiated
by its own distinctive styling, pricing strategy, distribution
channel and target consumer. The Company primarily contracts for
the manufacture of its products through a worldwide network of
quality manufacturers. The Company has capitalized on its
nationally known brand names by entering into various licenses for
several of its trademarks, including Jones New York, Evan-Picone,
Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., with
select manufacturers of women's and men's products which the
Company does not manufacture. For more than 30 years, the Company
has built a reputation for excellence in product quality and value,
and in operational execution. About Barneys New York, Inc. Barneys
New York, Inc. ( http://www.barneys.com/ ), a wholly owned
subsidiary of Jones Apparel Group, Inc., is a luxury retailer with
flagship stores in New York City, Beverly Hills, Chicago, Boston
and Dallas. Barneys also operates two regional full-price stores,
fourteen CO-OP Barneys New York stores, thirteen outlet stores and
two semi-annual warehouse sale events. About Istithmar Istithmar (
http://www.istithmar.ae/ ) is a private equity and alternative
investment house headquartered in Dubai, the United Arab Emirates,
with offices in Shanghai and New York. Established in 2003, it is
100% owned by Dubai World which in turn is wholly owned by the
Government of Dubai. In the three years since its inception,
Istithmar has invested in over 30 companies in three sectors --
consumer, industrial and financial services --- deploying in excess
of $1.6 billion of capital. Istithmar's 'I' Investment Philosophy
is based around three core principles -- Ideas, Inquiry and
Integrity -- and is the foundation on which the firm has
established a broad portfolio of highly successful investments in
the markets from North America and Europe to Asia and the Middle
East. Forward Looking Statements Certain statements contained
herein are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
regarding the Company's expected financial position, business and
financing plans are forward-looking statements. The words
"believes," "expect," "plans," "intends," "anticipates" and similar
expressions identify forward-looking statements. Forward-looking
statements also include representations of the Company's
expectations or beliefs concerning future events that involve risks
and uncertainties, including: -- the failure to obtain the
necessary financing arrangements to consummate the transaction; --
the occurrence of any event, change or other circumstances that
could give rise to the termination of the definitive agreement; --
the failure of either party to meet the closing conditions set
forth in the definitive agreement; -- risks that the proposed
transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the transaction;
-- the amount of costs, fees, expenses and charges related to the
transaction; -- non-expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; -- the
outcome of any legal or regulatory proceeding that may be
instituted against the Company and others following announcement of
the transaction; -- those associated with the effect of national
and regional economic conditions; -- lowered levels of consumer
spending resulting from a general economic downturn or lower levels
of consumer confidence; -- the performance of the Company's
products within the prevailing retail environment; -- customer
acceptance of both new designs and newly-introduced product lines;
-- the Company's reliance on a few department store groups for
large portions of the Company's business; -- consolidation of the
Company's retail customers; -- financial difficulties encountered
by customers; -- the effects of vigorous competition in the markets
in which the Company operates; -- the Company's ability to identify
acquisition candidates and, in an increasingly competitive
environment for such acquisitions, acquire such businesses on
reasonable financial and other terms; -- the integration of the
organizations and operations of any acquired businesses into the
Company's existing organization and operations; -- the Company's
reliance on independent foreign manufacturers; -- changes in the
costs of raw materials, labor and advertising; -- the general
inability to obtain higher wholesale prices for the Company's
products that the Company has experienced for many years; -- the
uncertainties of sourcing associated with the new environment in
which general quota has expired on apparel products (while China
has agreed to safeguard quota on certain classes of apparel
products through 2008, political pressure will likely continue for
restraint on importation of apparel); -- the Company's ability to
successfully implement new operational and financial computer
systems; and -- the Company's ability to secure and protect
trademarks and other intellectual property rights. A further
description of these risks and uncertainties and other important
factors that could cause actual results to differ materially from
the Company's expectations can be found in the Company's Annual
Report on Form 10- K for the fiscal year ended December 31, 2006,
including, but not limited to, the Statement Regarding
Forward-Looking Disclosure and Item 1A - Risk Factors therein, and
in the Company's other filings with the Securities and Exchange
Commission. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, such
expectations may prove to be incorrect. The Company does not
undertake to publicly update or revise its forward-looking
statements as a result of new information, future events or
otherwise. DATASOURCE: Jones Apparel Group, Inc. CONTACT: Wesley R.
Card, Chief Operating and Financial Officer of Jones Apparel Group,
Inc., +1-215-785-4000; or Joele Frank and Sharon Stern, of Joele
Frank, Wilkinson Brimmer Katcher, +1-212-355-4449 Web site:
http://www.jny.com/ http://www.barneys.com/
http://www.istithmar.ae/
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