TORONTO — Hudson’s Bay Company (TSX:HBC) successfully completed the sale of Lord + Taylor to Le Tote, Inc., a leading fashion rental subscription service, for $99.5 million (USD$75 million) in cash and a secured promissory note for $32.2 million (USD$25 million) payable in cash after two years, subject to customary adjustments.
HBC now holds an equity stake of approximately 25% in Le Tote, and a right to designate two members to Le Tote’s Board of Directors.
Le Tote has acquired the Lord + Taylor brand and related intellectual property, as well as assumed operations of 38 stores, Lord + Taylor digital channels and the associated inventory. In addition, Le Tote has hired the vast majority of Lord + Taylor’s associates.
HBC will maintain economic responsibility for the rent payments owed by Lord + Taylor at the 38 locations operated by Le Tote for the initial three years post-closing. Net of HBC’s distributions from HBS Global Properties, HBC expects to continue to be liable for approximately $77 million in Lord + Taylor total cash rent on an annual basis. Starting in 2021, HBC and Le Tote will have options to reassess the Lord + Taylor store network, which may include HBC recapturing select locations to determine their highest and best use, including possible redevelopment into mixed-use properties, which is an inherently complex, capital intensive, long-term project. For any recaptured or returned stores, HBC retains long-term rent responsibility, risk and costs for redevelopment.
HBC investors should refer to the company’s public filings available at www.sedar.com and at www.hbc.com, including the company’s Material Change Report filed August 28, 2019, for additional information and details on the transaction.
Source: Financial Post
