(Filed Under Financial and General Interest News). The proposed merger between Bendon Limited and Naked Brand Group has undergone significant changes, with Naked appearing to have won better terms.
First, according to a February 21 release from Naked, its “stockholders will, upon the closing to the merger, receive approximately 9.0% of the outstanding ordinary shares” of the combined enterprise. When the deal was first announced in January, 2017, Naked shareholders were slated to receive a 6.4% portion of the merged entity.
Second, “Bendon will pay an amount equal to Naked’s net operating loss each month until the closing of the merger. Naked and Bendon will work together in good faith to optimize all costs while continuing to focus on the strategic growth of Naked’s business.” Those monthly losses could be significant. In its latest quarter, Naked reported an operating loss of $900,070, or an average of $300,023 per month.
Both companies have stated they hope the merger, between Naked, a public company with sales in its last full fiscal year of $1.8 million, and privately-held Bendon, which claimed annual sales of $100 million, will result in a single publicly traded entity.
In the latest release Naked noted, “The outside date for completing the Merger has been extended to April 27, 2018, subject to an extension which date shall not to be later than May 7, 2018, after which either party may terminate the Amended Merger Agreement.” Originally the companies planned to complete the merger by mid-2017.
“The ability of Naked to solicit alternative transactions has been modified,” the release continued, “so that Naked may solicit such transactions if the Merger is not completed by the outside date or if Bendon fails to pay to Naked a monthly amount equal to the net operating losses of Naked.” Naked has repeatedly postponed looking for another partner (or an alternative transaction). In January, 2017 it had “agreed to adhere to a no-shop provision until the earlier of the date the Merger Agreement is executed or the LOI is terminated. If the Merger Agreement is not executed by February 10, 2017, or the Merger is not consummated within six months thereafter.”
During the past year, Naked’s sales have risen but its losses have continued, it’s team has moved into the Bendon offices in New York and parts of its sales force have left.
As part of the announcement of the new merger terms, Naked’s CEO and chief creative officer Carole Hochman, declared, “I am proud of the hard work and continuous effort that our team has put in to this amended merger agreement with Bendon. We continue to work towards finalizing the registration statement, which remains subject to the SEC’s review, comment and approval process. We believe that these amendments to the Merger Agreement provide additional benefits for both our stockholders and the go-forward business.” — NM
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