Simon part of group trying to save at least 229 Aeropostale stores

August 31, 2016

Indianapolis-based shopping mall giant Simon Property Group has joined a joint venture seeking to save at least 229 stores in the bankrupt teen clothing chain Aeropostale.

Besides Simon, the group includes rival mall landlord General Growth Properties, licensing firm Authentic Brands Group and liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC, sources told the Wall Street Journal.

Without the rescue, it appears the retailer’s remaining stores are heading for liquidation, an event that will put about 10,000 people out of work.

Aeropostale said the so-called “going concern” bid is for “substantially all” of its assets. The amount of the bid wasn’t disclosed but the Wall Street Journal said it was $243.3 million, citing sources familiar with the matter.

The bid would also cover expenses including Aeropostale’s bankruptcy financing, the company said in a filing late Tuesday in Manhattan federal court. The auction, which has been going all week, will continue Wednesday, according to the filing.

New York-based Aeropostale filed for Chapter 11 protection in May, joining other mall-based fashion retailers that have struggled to compete with big-box chains, online merchants and “fast fashion” rivals.

The company, which had about 800 locations in the U.S. and Canada before it filed, also accused private-equity lender Sycamore Partners of using a supplier it controlled to steer the chain into bankruptcy and buy it on the cheap.

Last week, the bankruptcy judge shot down that contention and said Sycamore could take part in the auction, bidding with about $150 million in debt it is owed in lieu of putting up cash.

The decision gives Sycamore an advantage because it won’t have to come up with as much cash to outbid other parties.

The going-concern bid announced Tuesday also comes with a backup plan: If it isn’t chosen as the “best and highest” offer, joint venture members Hilco, Gordon Brothers and Authentic Brands will bid on the chain’s merchandise and intellectual property.

In May, Aeropostale said it would close 113 of its 739 U.S. stores and all 41 locations in Canada. The closures hit Indiana stores at College Mall in Bloomington and Jefferson Pointe in Fort Wayne.

Aeropostale has Indianapolis-area stores at Castleton Square, Circle Centre, Hamilton Town Center, Perry Crossing and Greenwood Park Mall.

Almost every teen retailer has suffered under a vastly altered consumer landscape that took root during the recession. Fast fashion" outfits like H&M and Forever 21, with more inexpensive clothes, have emerged in recent years to take a growing market share from Aeropostale, Abercrombie & Fitch and American Eagle Outfitters, stores that not so long ago dominated the retail sector.

Once worth almost $2.6 billion, Aeropostale's market capitalization fell to about $2 million at the time of the bankruptcy filing.

The company's shares traded for more than $30 six years ago, when annual sales exceeded $2 billion. In April, it was delisted from the New York Stock Exchange after shares failed to break the $1 barrier for a year.

Aeropostale shares on Wednesday were trading over the counter for 5.5 cents each.


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