Philadelphia—Private equity firm Versa Capital Management got the go-ahead Wednesday from a Delaware bankruptcy judge to continue its bid to acquire Wet Seal, which is in Chapter 11.
At a hearing in Wilmington, U.S. Bankruptcy Judge Christopher S. Sontchi approved the $20 million loan that Versa affiliate Mador Lending LLC agreed to furnish when it beat out stalking horse bidder and DIP lender B. Riley Financial Inc. in an auction for Wet Seal’s assets.
‘Best Positioned in Marketplace’
“We have been assessing the dramatically shifting landscape in Wet Seal’s category for more than a year and determined that Wet Seal, among the many companies we evaluated, was best positioned in the marketplace, and thus we pursued this deal with determination,” said Versa CEO Gregory Segall.
Under the purchase agreement, Versa will acquire all the assets of Wet Seal, including more than 140 locations that still exist, reports say.
The Wall Street Journal reported that Versa will invest an initial $10 million into the company’s operations. The deal “includes $7.5 million in cash slated for unsecured creditors, an agreement to pay so-called cure costs as well as administrative and priority claims, and $10 million in exit financing.”
“Versa also agreed to take over a $20 million bankruptcy financing commitment from B. Riley and pay B. Riley a $625,000 breakup fee.”