Centric Brands Reaches Agreement with Lenders to Position the Company for Long-Term Growth

May 18, 2020

Source: Business Wire

Centric Brands Inc. (the “Company”) (NASDAQ: CTRC), a leading lifestyle brands collective, announced today that it has entered into a Restructuring Support Agreement (“RSA” or the “agreement”) with substantially all of the Company’s secured lenders, led by certain funds managed by Blackstone (“Blackstone”), Ares Management Corporation (“Ares”), and HPS Investment Partners (“HPS”), to recapitalize the Company, provide $435 million in debtor-in-possession financing and allow the Company to operate without interruption throughout the restructuring process.

Additionally, the agreement contemplates a timely emergence from the process with a plan to substantially reduce the Company’s funded second lien indebtedness by approximately $700 million, thereby positioning the business for future growth and success. As part of the agreement, the Company has voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, White Plains Division.

Centric Brands intends to continue operating in the ordinary course. The debtor-in-possession financing secured enables the Company to continue to meet its financial obligations throughout this process to employees, licensors, suppliers, and vendors. Upon completion, the Company plans to emerge from the reorganization as a private company, under the supportive ownership of its current lenders.

“Today’s agreement marks the beginning of our next chapter as an even stronger company and builds upon our progress to date executing on our long-term strategy. I am honored that Centric Brands’ lender group has such strong confidence in our team. Their partnership and support will enhance our ability to continue to grow our business, providing best-in-class design with an unmatched sourcing network, retail partnerships, industry expertise, and deep relationships with licensors,” said Mr. Jason Rabin, CEO of Centric Brands.

Mr. Rabin continued: “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.”

Plan for Emergence & Partnership with Lender Group

Under the terms of the RSA, Centric Brands expects to emerge from Chapter 11 as a private company. Blackstone will exchange second lien debt for equity interests in the reorganized company. Existing senior lenders Ares and HPS will retain their senior loan positions and will receive equity interests in the reorganized company.

“Our lenders understand the Company’s growth plan and have a productive and trusted working relationship with its management team,” added Mr. Rabin. “Centric Brands is looking forward to benefiting from their capital, strategic insight, global relationships, and support.”

Blackstone is one of the world’s leading investment firms with approximately $538 billion in assets under management. Ares is a leading, global alternative investment manager with $149 billion in assets under management. HPS is a leading global investment firm with over $60 billion in assets.

Business Operations

For a majority of its operations, the Chapter 11 process will not impact the Company’s decision to reopen relevant locations.

“This financial restructuring process will allow us to optimize our operations while maintaining our valued, long-standing relationships with our business partners,” added Mr. Rabin. “We look forward to welcoming our employees and customers back as soon as it is safe to do so.”

Additional Information

Centric Brands has launched a reorganization hotline, accessible to U.S. callers at +1 844-974-2131 (toll-free) and international callers at +1 929-955-3419. Customers, vendors, employees, or other interested parties who may have questions related to the reorganization may call this hotline for more information. In addition, court filings and other documents related to the restructuring are available on a separate website administered by the Company's claims agent, Prime Clerk at https://cases.primeclerk.com/centricbrands.

Ropes & Gray LLP, Dechert LLP, PJT Partners, Inc., and Alvarez & Marsal served as legal, financial, and restructuring advisors to Centric Brands.

The restructuring plan is subject to satisfaction of certain customary conditions, including approvals by the Bankruptcy Court. If the restructuring transactions contemplated by the restructuring support agreement are consummated, the Company's existing common stock will be extinguished and the holders of the common stock will not receive any consideration, consistent with legal priorities.

About Centric Brands Inc.

Centric Brands Inc. (NASDAQ: CTRC) (the “Company”) is a leading lifestyle brand collective that designs, sources, markets and sells high quality products in multiple segments, including kids, men’s and women’s apparel, accessories, beauty, and entertainment. The Company’s portfolio includes more than 100 iconic licensed brands, including for kids apparel, Calvin Klein®, Tommy Hilfiger®, Nautica®, Spyder® and Under Armour®; for men’s and women’s apparel, Joe’s Jeans®, Buffalo®, Hudson Jeans®; for accessories, Kate Spade®, Michael Kors®, All Saints®, Frye®, Timberland® and Jessica Simpson®; and for entertainment, Disney®, Marvel®, Nickelodeon® and Warner Brothers®, among others. Owned brands include Hudson®, Robert Graham®, Swims®, Zac Posen® and Avirex®. The Company’s products are sold primarily in North America through leading mass market retailers, specialty, and department stores, and online. Centric Brands has unparalleled expertise in product design, development and sourcing, retail and digital commerce, marketing, and brand building. The Company is headquartered in New York City and has offices in White Plains, Los Angeles, Greensboro, N.C., Toronto, and Montreal. For more information about Centric Brands please visit https://www.centricbrands.com.

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