P180 Acquires Sun Capital’s Majority Stake in Vince Holding Corp.

Rhea-AI Summary

Vince Holding Corp. (NYSE: VNCE) announced that P180 has acquired a majority stake from Sun Capital Partners. As part of the transaction, Brendan Hoffman is expected to become CEO effective February 3, 2025, replacing interim CEO David Stefko, who will remain on the board.

The deal includes significant debt reduction through multiple transactions: a $20 million pay-down of the Sun Debt Facility using $15 million from increased ABL Credit Facility borrowings, and P180's acquisition and cancellation of $7 million in loans. This reduces VNCE's subordinated debt by approximately $27 million, leaving $7.5 million outstanding.

Following the acquisition, P180 owns approximately 65% of VNCE's outstanding common stock, while Sun Capital retains about 2%. P180 has agreed to reimburse certain transaction-related fees and expenses, including legal fees and BofA consent fees.

Positive

• Significant debt reduction of $27 million through debt restructuring
• Strategic acquisition by P180 bringing operational expertise and digital capabilities
• Access to CaaStle's technology platform for improved profitability
• Incoming CEO Brendan Hoffman has previous experience leading VNCE

Negative

• Increased borrowings under ABL Credit Facility to pay down Sun Debt
• Remaining $7.5 million in subordinated debt still outstanding
• Major ownership change with 65% control going to P180

Insights

Financial Analyst

The acquisition of Vince Holding Corp by P180 marks a pivotal financial restructuring that substantially improves VNCE's balance sheet. The deal's centerpiece is a $27 million debt reduction, achieved through a $20 million paydown and $7 million debt forgiveness, leaving only $7.5 million in subordinated debt. This 78% reduction in subordinated debt significantly strengthens VNCE's financial position and reduces interest burden.

The transaction's structure is particularly clever: By using the existing ABL Credit Facility to pay down higher-cost subordinated debt, VNCE optimizes its capital structure while P180's debt forgiveness component provides immediate financial relief. This financial engineering demonstrates P180's commitment to creating a stronger foundation for growth.

The ownership transition, with P180 acquiring a 65% controlling stake and Sun Capital retaining just 2%, represents a clean break that could accelerate decision-making and strategic initiatives. The return of Brendan Hoffman as CEO brings valuable institutional knowledge and proven leadership, having previously led VNCE for five years.

A key strategic advantage emerges from P180's connection to CaaStle, a technology platform specializing in inventory monetization. For VNCE, operating 47 full-price stores and 14 outlet locations, better inventory management could significantly improve working capital efficiency and profit margins. The integration with CaaStle's platform could enhance VNCE's existing subscription service, Vince Unfold, creating new revenue streams in the luxury contemporary market.

Retail Industry Expert

This acquisition positions VNCE for a significant digital transformation in the luxury contemporary market. The integration with CaaStle's technology platform is particularly strategic for VNCE's retail network of 47 full-price and 14 outlet stores, potentially revolutionizing inventory management and creating a more dynamic omnichannel experience.

The timing is opportune as luxury contemporary brands are increasingly focusing on digital capabilities and inventory optimization. P180's previous investments in Altuzarra and elysewalker suggest a broader strategy to build a portfolio of complementary luxury brands with shared technological infrastructure.

The deal's structure indicates a focus on operational efficiency and profitability improvement rather than mere financial engineering. By leveraging CaaStle's platform, VNCE can potentially reduce markdown exposure, optimize inventory levels across channels and enhance its subscription service offering. This could lead to improved full-price selling ratios and better gross margins.

The retention of the existing store network, combined with enhanced digital capabilities, suggests a commitment to an omnichannel strategy that could differentiate VNCE in the competitive luxury contemporary market. The focus on 'monetizing inventory' points to a sophisticated approach to managing the balance between online and offline channels, potentially setting new standards for inventory efficiency in luxury retail.

Vince Holding Corp. Significantly Reduces Debt

Brendan Hoffman Expected to Become CEO of Vince Holding Corp.

NEW YORK--(BUSINESS WIRE)-- Vince Holding Corp., (NYSE: VNCE) (“VNCE” or the “Company”), a global contemporary retailer, today announced that P180, a new venture focused on accelerating growth and profitability in the luxury apparel sector, acquired a majority stake in VNCE (the “P180 Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”).

In conjunction with the P180 Acquisition, Brendan Hoffman is expected to assume the role of Chief Executive Officer of VNCE effective on or around February 3, 2025, subject to finalization of his employment terms. With this transition, David Stefko is expected to step down as Interim CEO of VNCE and continue to serve on the VNCE Board of Directors. In addition, Matthew Garff resigned from the VNCE Board of Directors in connection with the P180 Acquisition.

"VNCE is the perfect partner for P180; the brand's dominance in the luxury contemporary market aligns seamlessly with our acquisition strategy. In addition, as VNCE has evolved its operating model, we believe having access to the technology and team of CaaStle, founded by Christine Hunsicker, my co-founder at P180, will further advance the company’s momentum in driving improved profitability while enhancing its omni-channel experience." Mr. Hoffman added, "Personally, I have a strong connection to the Vince brand, having served as VNCE CEO for five years. I am excited to lead the team again as we continue to unlock new growth opportunities, drive innovation, enhance the brand's market position, and focus on monetizing the Company’s inventory to ensure continued long-term success."

"P180's acquisition represents a transformative opportunity for VNCE. With this transaction, we will gain the operational expertise and cutting-edge digital capabilities needed to drive the brand's future success,” commented Michael Mardy, Chairman of VNCE. “On behalf of the Board and the organization, I would also like to thank Dave for stepping into the interim CEO role for the past year. Through his leadership, the company has continued to execute and deliver results by operating a healthier full price model. We are glad to have Dave remain on the Board and are excited to welcome Brendan back to lead the organization into its next chapter."

This acquisition marks the third strategic deal for P180 since its inception in 2024 and follows its recent investment with the prestigious fashion label Altuzarra and digital partnership with the multi-brand premium retailer elysewalker.

VNCE Significantly Reduces Debt

Simultaneously with the P180 Acquisition, an indirectly wholly owned subsidiary of VNCE, V Opco, LLC (“V Opco”), amended its existing credit agreement (the “ABL Credit Facility”) with Bank of America, N.A. (“BofA”). The amendment consents to, among other things, the change in control in connection with the P180 Acquisition, as well as a partial pay down of the subordinated debt (“Sun Debt Facility”) with SK Financial Services, LLC, an affiliate of Sun Capital, through increased borrowings under the ABL Credit Facility. On the same day, V Opco paid $15 million to SK Financial Services, LLC using proceeds from the ABL Credit Facility, which resulted in a pay-down of $20 million under the Sun Debt Facility (the “Sun Debt Paydown”).

In addition, P-180 acquired and assumed $7 million of the loans (the “P-180 Assumed Loan”) outstanding pursuant to the Sun Debt Facility and immediately thereafter cancelled such $7 million (the “P-180 Debt Forgiveness”).

Following the Sun Debt Paydown and P-180 Debt Forgiveness, the outstanding principal amount of subordinated loans is reduced by approximately $27 million with $7.5 million remaining outstanding under the Sun Debt Facility, which will continue to accrue payment-in-kind interest in accordance with, and otherwise be subject to, the terms and conditions therein.

Immediately following the P-180 Acquisition, P180 beneficially owned approximately 65% of all outstanding shares of common stock of VNCE and affiliates of Sun Capital continue to beneficially own approximately 2% of the Company’s outstanding common stock.

As part of the terms to the transactions described above, P-180 agreed to reimburse the Company for certain fees and expenses incurred in connection with such transactions, including the Company’s legal fees as well as the consent fee to BofA.

About P180:

P180, a new venture co-founded by Christine Hunsicker (founder and CEO of CaaStle, Inc.) and Brendan Hoffman, is dedicated to driving brand and retailer profitability by providing operational expertise and access to leading industry resources, including CaaStle's innovative monetization platform. P180's core mission is to invest in or acquire brands and retailers that stand to benefit from digital expertise and inventory monetization.

About VNCE:

Vince Holding Corp. is a global retail company that operates the Vince brand women's and men's ready to wear business. Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. Vince Holding Corp. operates 47 full-price retail stores, 14 outlet stores, and its e-commerce site, vince.com and through its subscription service Vince Unfold, www.vinceunfold.com, operated by CaaStle, as well as through premium wholesale channels globally. Please visit www.vince.com for more information.

Forward-Looking Statements: This document contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our planned transformation program and our current expectations about possible or assumed future results of operations of the Company and are indicated by words or phrases such as "may," "will," "should," "believe," "expect," "seek," "anticipate," "intend," "estimate," "plan," "target," "project," "forecast," "envision" and other similar phrases. Although we believe the assumptions and expectations reflected in these forward-looking statements are reasonable, these assumptions and expectations may not prove to be correct and we may not achieve the results or benefits anticipated. These forward-looking statements are not guarantees of actual results, and our actual results may differ materially from those suggested in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, including, without limitation: our ability to successfully manage the transition of VNCE majority ownership to P180 and to execute P180’s strategies for the Company; our ability to execute and realize the enhanced profitability expectations of our planned transformation program; our ability to maintain the license agreement with ABG Vince, a subsidiary of Authentic Brands Group; ABG Vince's expansion of the Vince brand into other categories and territories; ABG Vince's approval rights and other actions; our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs; our ability to realize the benefits of our strategic initiatives; general economic conditions; further impairment of our goodwill; the execution and management of our direct-to-consumer business growth plans; our ability to make lease payments when due; our ability to maintain our larger wholesale partners; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to comply with domestic and international laws, regulations and orders; our ability to anticipate and/or react to changes in customer demand and attract new customers, including in connection with making inventory commitments; our ability to remain competitive in the areas of merchandise quality, price, breadth of selection and customer service; our ability to attract and retain key personnel; seasonal and quarterly variations in our revenue and income; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to optimize our systems, processes and functions; our ability to comply with privacy-related obligations; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; fluctuations in the price, availability and quality of raw materials; commodity, raw material and other cost increases; the extent of our foreign sourcing; our reliance on independent manufacturers; other tax matters; and other factors as set forth from time to time in our Securities and Exchange Commission filings, including those described under "Item 1A—Risk Factors" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We intend these forward-looking statements to speak only as of the time of this release and do not undertake to update or revise them as more information becomes available, except as required by law.

This press release is also available on the Vince Holding Corp. website (http://investors.vince.com/).

View source version on businesswire.com: https://www.businesswire.com/news/home/20250122591243/en/

VNCE Investor Relations Contact:

Caitlin Churchill

ICR, Inc.

Caitlin.Churchill@icrinc.com

P180 Media Contacts:

Jacqueline Renaud

Vice President

Lividini & Co.

Jacqueline@lividini.com

Morgan Tanacea

Senior Director

Lividini & Co.

Morgan@lividini.com

Source: Vince Holding Corp.

FAQ

How much debt did VNCE reduce through the P180 acquisition transaction?

VNCE reduced its subordinated debt by approximately $27 million through a combination of a $20 million Sun Debt Facility pay-down and P180's $7 million debt forgiveness.

What percentage of VNCE does P180 now own after the acquisition?

Following the acquisition, P180 beneficially owns approximately 65% of all outstanding shares of VNCE common stock.

When will Brendan Hoffman become CEO of VNCE?

Brendan Hoffman is expected to assume the role of CEO of VNCE effective on or around February 3, 2025, subject to finalization of employment terms.

How much subordinated debt remains for VNCE after the P180 transaction?

$7.5 million remains outstanding under the Sun Debt Facility, which will continue to accrue payment-in-kind interest.

How many retail stores does VNCE currently operate?

VNCE operates 47 full-price retail stores and 14 outlet stores, along with its e-commerce site and subscription service.