Sun Capital shifts retail brands to new platform

The Florida-based firm’s portfolio company Kellwood has finalised a $179m divestiture, selling off two brands to a newly created Sun Capital platform company to repay its debt.

Sun Capital portfolio company Kellwood has sold children’s apparel brands Gerber Childrenswear and Hanna Andersson for $179 million to Sun Capital affiliate Childrenswear.

Childrenswear is a platform company created for the purpose of acquiring Gerber and Hanna Andersson and could potentially acquire additional brands in the future, a company spokesman said.

Kellwood will use $145 million of the sale proceeds to pay down all of its borrowings under its revolving credit agreement.

Kellwood had purchased Gerber in June 2002 for an undisclosed amount and acquired Hanna Andersson in June 2007 for $175 million. Both brands will operate as stand-alone business units within Childrenswear.

Sun Capital took Kellwood private in February 2008 in a transaction valued at approximately $767 million, including the assumption of Kellwood’s net debt after an earlier offer of $544 million was rejected.

Boca Raton-based Sun Capital recently saw portfolio company Mervyns department stores go into liquidation after the company failed to return to profitability following its July Chapter 11 filing. Sun Capital, Cerberus Capital Management and Lubert-Adler Real Estate were named in a lawsuit filed by Mervyns alleging that the firms “siphon[ed]” around $1 billion in real estate assets from the company to leverage its $1.2 billion buyout, eventually forcing the company into bankruptcy.

Sun Capital, which specialises in turnarounds and restructurings, is currently deploying its $6 billion fifth fund which closed in April 2007. The firm’s previous fund closed on $1.5 billion in 2005.