Second Avenue Capital Partners, SB360 Capital Partners, and Ares Commercial Finance Support CSC Generation Enterprise's Acquisition of Backcountry with a $112,000,000 Credit Facility

Rhea-AI Summary

Second Avenue Capital Partners (SACP), SB360 Capital Partners (SB360), and Ares Commercial Finance (Ares) have closed a $112 million Senior Secured Revolving Credit Facility and Term Loan for Backcountry, a premium outdoor gear and apparel retailer. This financing package supported CSC Generation Enterprise's acquisition of Backcountry and refinanced a previous facility.

Backcountry, founded in 1996, has evolved from a small online ski gear shop to an omni-channel retailer with four e-commerce banners, presence on two 3rd party marketplaces, and nine retail stores. The company sells its own brand and products from established and emerging brands.

This deal marks another collaboration between CSC and SACP, following their partnership in the Sur La Table acquisition in 2020. The financing structure leverages the expertise of SACP, SB360, and Ares to provide a tailored solution for Backcountry's needs.

Positive

• Acquisition of Backcountry by CSC Generation Enterprise, indicating potential for growth and expansion
• $112 million credit facility secured, providing substantial financial support for the acquisition and operations
• Collaboration of multiple financial partners (SACP, SB360, Ares) suggesting strong confidence in the deal
• Backcountry's diverse omni-channel presence across e-commerce, marketplaces, and physical stores
• CSC's track record of successful specialty retail acquisitions, as evidenced by previous Sur La Table deal

Negative

• Refinancing of previous facility, potentially indicating existing debt obligations
• Potential integration challenges and costs associated with the acquisition
• Increased debt load for Backcountry following the new credit facility

Insights

Financial Analyst

The $112,000,000 credit facility for Backcountry's acquisition by CSC Generation Enterprise is a significant financial move in the outdoor retail sector. This deal demonstrates strong investor confidence in Backcountry's potential and CSC's ability to transform retail businesses. The refinancing and acquisition support could provide Backcountry with improved liquidity and resources for growth.

The involvement of multiple financial partners (SACP, SB360 and Ares) suggests a complex and well-structured deal, potentially reducing risk. CSC's track record of successful retail acquisitions, including Sur La Table, indicates a strategic approach to revitalizing established brands. This could lead to operational efficiencies and digital transformation for Backcountry, potentially boosting its market position in the competitive outdoor gear space.

Retail Industry Expert

CSC's acquisition of Backcountry represents a notable shift in the outdoor retail landscape. With Backcountry's strong brand recognition and CSC's AI-enabled platform, we could see a significant digital transformation in how outdoor gear is marketed and sold. The company's omni-channel presence, including e-commerce, marketplaces and physical stores, positions it well for future growth.

The outdoor recreation market has seen robust growth, especially post-pandemic. Backcountry's diverse product range, including its own brand and popular names like Patagonia and The North Face, caters to this expanding market. CSC's expertise in digital-first strategies could help Backcountry capitalize on changing consumer behaviors, potentially leading to increased market share and profitability in the competitive outdoor retail sector.

M&A Specialist

This acquisition showcases a growing trend of private equity firms targeting established retail brands for digital transformation. CSC's strategy of acquiring and transforming retailers into digital-first businesses aligns with current market dynamics, where e-commerce and omnichannel experiences are increasingly crucial.

The $112 million facility not only supported the acquisition but also refinanced existing debt, potentially providing Backcountry with a more favorable capital structure. This financial flexibility could enable strategic investments in technology, inventory and expansion. The partnership between CSC and the lending consortium (SACP, SB360 and Ares) demonstrates a collaborative approach to M&A financing, which could become more common in retail sector deals as traditional lenders remain cautious.

BOSTON, Sept. 18, 2024 /PRNewswire/ -- Schottenstein affiliates Second Avenue Capital Partners (SACP) and SB360 Capital Partners (SB360), providers of customized solutions for the retail and consumer product sectors, along with Ares Commercial Finance (Ares), are pleased to announce the closing of a $112,000,000 Senior Secured Revolving Credit Facility and Term Loan for Backcountry, the leading, premium specialty retailer of outdoor gear and apparel. The new financing package refinanced a previous facility and supported the company's acquisition by venture-backed firm CSC Generation Enterprise (CSC).

Backcountry was founded in 1996 by Jim Holland and John Bresee in Park City, Utah. Holland was a former ski jumper, and Bresee was a journalist and web developer. The company started as a small online shop focused on backcountry skiing gear, which was a niche market at the time. The website initially sold avalanche beacons, a critical safety tool for backcountry skiers.

Today, the company sells not only its own exclusive brand, Backcountry, but also a wide range of products from established brands like Columbia, Patagonia, The North Face, and Specialized, as well as emerging brands such as Hoka and On Running. Backcountry has an omni-channel presence selling through four e-commerce banners (Backcountry, Steep & Cheap, Competitive Cyclist, and MotoSport), two 3rd party marketplaces (Amazon and eBay), and nine Backcountry retail stores located in six states and the District of Columbia.

"We are thrilled to partner again with the CSC team," said Mark E. Gallivan, Managing Director of Second Avenue Capital Partners. "When they approached us to support their acquisition of Backcountry, we jumped at the opportunity to support a sponsor who we've seen first-hand succeed in the specialty retail sector."

CSC and SACP first paired up for CSC's acquisition of Sur La Table in 2020. Since then, the two firms have done multiple deals together.

"Second Avenue Capital Partners has been our go-to source of financing for several years," said Justin Yoshimura, CEO of CSC. "We are incredibly excited about the Backcountry deal and the opportunity to shepherd the business into its next era of success. With their sector expertise, having SACP and SB360 as financing partners allows us to focus on executing our business plan, knowing they have our financing needs covered."

Second Avenue Capital Partners has a proven track record of providing financial solutions to companies in the wholesale, retail, and consumer goods sectors, focusing on fostering sustainable growth and success. The firm's strength and affiliations make SACP an ideal lending partner, adding value and support to take businesses to the next level.

SB360 Capital Partners and Ares Commercial Finance played a pivotal role in providing the total financing package extended to Backcountry. Aaron Miller, President of SB360, emphasized the strategic advantage of their involvement: "As an affiliate of the Schottenstein organization with significant expertise in collateral, SB360 was able to offer added flexibility in structuring this type of financing. Collectively, we could better tailor the solution to meet Backcountry's unique needs." He continued, "This deal also afforded us an exciting opportunity to collaborate with Ares Commercial Finance, a lender that shares our vision and approach, creating a powerful partnership in delivering this financing."

About Second Avenue Capital Partners LLC – Second Avenue Capital Partners, LLC (SACP), a Schottenstein Affiliate, specializes in asset-based loans for the broader retail and consumer products industry. Serving middle-market companies, SACP leverages the experience of retail operators, product merchants, and lenders to deliver customized capital solutions. A unique merchant perspective allows SACP to recognize and unlock value in assets other capital providers often overlook or do not understand. The firm's tailored financial solutions are a vital resource for clients seeking capital to effectuate strategy and achieve financial objectives. Learn more at sacp.com.

About SB360 Capital Partners – SB360 Capital Partners (sb360.com), a Schottenstein Affiliate, is one of North America's leading asset realization and merchant banking firms. The firm invests equity capital to support growth opportunities, fund business turnarounds, and provide liquidity to businesses navigating change. SB360 encompasses business groups involved in advisory services, asset disposition, luxury diamond and jewelry assets, new store sets, and commercial real estate advisory and investment. The firm's lending arm, Second Avenue Capital Partners, provides asset-based loans for middle-market companies. SB360's principals hold extensive financial interests in internationally recognized retail and wholesale companies, consumer brands, financial service operations, and commercial, residential and industrial real estate properties.

About Ares Commercial Finance - Ares Commercial Finance ("ACF") is the commercial finance platform of Ares Management Corporation. ACF provides credit facilities up to $300 million to middle market and lower-middle market companies. ACF addresses a wide scope of industries including manufacturing, distribution, wholesale, retail and consumer products, and service. Leveraging the breadth and experience of the Ares platform, ACF works with borrowers to deliver creative, flexible, and customized financing solutions for a variety of financing needs: general refinancing, working capital/growth, acquisitions, restructuring/turnaround situations, debtor-in-possession/exit financing, and special accommodation financing. For more information on ACF visit www.arescommercialfinance.com.

About Ares Management Corporation - Ares Management Corporation (NYSE:ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, real estate, private equity and infrastructure asset classes. We seek to provide flexible capital to support businesses and create value for our stakeholders and within our communities. By collaborating across our investment groups, we aim to generate consistent and attractive investment returns throughout market cycles. As of June 30, 2024, Ares Management Corporation's global platform had over $447 billion of assets under management, with more than 2,950 employees operating across North America, Europe, Asia Pacific and the Middle East. For more information, please visit www.aresmgmt.com.

About CSC Generation Enterprise – CSC Generation Enterprise (CSC) is an AI-enabled multi-brand platform that acquires and transforms retailers into profitable, digital-first, consumer-centric businesses. CSC's retail platform is purpose built around its core M&A strategy and drives alpha by encoding revenue growth, unit margin management, and other expert-level retail practices into automation and AI. CSC owns and operates more than 10 retail, eCommerce, and wholesale brands, including Sur La Table, Backcountry, and One Kings Lane.

About Backcountry – Established in 1996, Backcountry stands as a trusted cornerstone in outdoor retail, known for its commitment to providing premium products and services tailored to a variety of recreational pursuits—skiing, snowboarding, biking, running, camping, hiking, climbing, paddling, fishing, and beyond. For beginners and pros alike, Backcountry sells nearly 800 esteemed brands, both online and across its nine U.S. brick-and-mortar locations. This includes Backcountry's in-house apparel line, which has produced several performance-driven franchises known for quality and durability such as Cottonwoods, Cardiac, Tahoe, Wasatch, Slickrock and more—each developed in collaboration with Backcountry's athlete team and backed by its team of Gearhead experts. With decades of experience, a broad assortment of innovative products, and an unparalleled concierge service, Backcountry is your one-stop-shop for every adventure at any budget.

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SOURCE Second Avenue Capital Partners, LLC

FAQ

What is the value of the credit facility provided for Backcountry's acquisition?

The credit facility provided for Backcountry's acquisition is $112 million, structured as a Senior Secured Revolving Credit Facility and Term Loan.

Who acquired Backcountry and who provided the financing?

Backcountry was acquired by CSC Generation Enterprise. The financing was provided by Second Avenue Capital Partners (SACP), SB360 Capital Partners (SB360), and Ares Commercial Finance (Ares).

What is Backcountry's current retail presence?

Backcountry has an omni-channel presence with four e-commerce banners (Backcountry, Steep & Cheap, Competitive Cyclist, and MotoSport), presence on two 3rd party marketplaces (Amazon and eBay), and nine physical retail stores in six states and Washington D.C.

When was Backcountry founded and what was its initial focus?

Backcountry was founded in 1996 by Jim Holland and John Bresee in Park City, Utah. It started as a small online shop focused on backcountry skiing gear, initially selling avalanche beacons.

How does this acquisition relate to CSC Generation Enterprise's previous deals?

This acquisition continues CSC's partnership with SACP, following their previous collaboration in acquiring Sur La Table in 2020. The companies have completed multiple deals together since then.