Philly turnaround firm eyes fixes for bankrupt, shrunken Wet Seal stores
Turnaround investor Versa tries women's clothing
Versa Capital Management LLC, the Philadelphia-based, $1.4 billion-asset turnaround investor run by Greg Segall and backed by Ira Lubert's Independence Capital Group, says it is "the winning bidder" in an auction for The Wet Seal Inc., the bankrupt young women's clothing store chain, and its 173 remaining stores in 42 states and Puerto Rico. The money-losing chain announced in January it was closing 338 stores, and starting in December 2014 closed another 150 locations, as a wave of retail bankruptcies and shutdowns has alarmed shopping-mall owners. Surviving Philadelphia-area Wet Seal locations include the Deptford and Springfield malls. Wet Seal is based in Foothill Ranch, Calif.
Versa plans to take over debtor-in-possession financing, under a proposal pending before U.S. Bankrutcpy Court in Wilmington, Del. that will be the subject of a March 18 hearing. The proposed sale under Section 363 of the Bankruptcy Code would sell Wet Seal to a Versa affiliate. Details at www.donlinrecano.com/wetseal .
After reviewing Wet Seal and its competitors over the past year, Versa found that Wet Seal "was best positioned in the marketplace, and thus we pursued this deal with determination," Segall, Versa's chairman and CEO, said in a statement. He added that Versa will work with Wet Seal CEO Ed Thomas to close the deal "and pursue the many opportunities for growth and profitability now available under Versa's ownership." Segall inferred Versa may look for other women's retail opportunities, as it has in the outdoor sector (see "other Versa retail" below).
The Versa offer is "the best possible outcome for our creditors, employees, customers and other constituents," Thomas said in the same statement. He projected "an orderly emergence from bankruptcy" and improved financial and operating performance for the chain. Versa's legal advisers include Greenberg Traurig LLP, Klehr Harrison Harvey Branzburg LLP, and KPMG LLP. Wet Seal turned to Klee, Tuchin, Bogdanoff & Stern LLP, Paul Hastings LLP, and Houlihan Lokey Capital, Inc.
Other Versa retail chains include Avenue Stores (clothing for plus-sized women), outdoor retailer Vestis (which includes Bob's Stores, Eastern Mountain Sports and Sport Chalet), Black Angus Steakhouse restaurants, Civitas Media community newspapers, and specialized manufacturers.
The Wet Seal, Inc., a pioneer in fast fashion retailing, sells apparel, footwear and accessories designed for teen girls and young women of all sizes through retail stores nationwide, as well as an e-commerce website. As of January 15, 2015, the company operated a total of 173 stores in 42 states and Puerto Rico and an e-commerce business at www.wetseal.com. For more company information, visit www.wetsealinc.com.