Boston, MA 05/27/2014 (wallstreetpr) – Aeropostale Inc. (NYSE:ARO) shareholders could finally heave a sigh of relief as the company continues to make a turnaround in the stock exchange in terms of share prices. The company stock is already up by as much as 15.25% in mid-morning trading session. The surge is attributed to the closure of $150 million financing from affiliates of private equity firm, as well as the closure of strategic partnership with Sycamore partners.
Financing Made of Two Loans
The deal announced in early March was made of $100 million loan payable in five years’ and $50 million loan payable in over 10 years. The ten year loan is made of a sourcing agreement with sycamore and Aeropostale Inc. (NYSE:ARO) committing to purchase merchandise annually. The sourcing is to be used in diversifying apparel production processes.
The sourcing of the funds also involves Aeropostale giving sycamore exclusive rights of acquiring up to 5% of the company at an exercise price of $7.25 issued in convertible preferred stock. Closing of the transaction also saw Aeropostale Inc. (NYSE:ARO) appointing two new members into its board of directors; Stefan Kaluzny and Julian Geiger.
Dismal Q1 Financial Results
The transaction with Sycamore partners essentially strengthens Aeropostale financial position going forward. The funds also provides the management with the much needed funds to execute key strategic initiatives that should position the company’s brands. The financing could not have come at a better time, considering the company reported dismal first quarter financial results.
Aeropostale net sales for the first quarter plummeted by 12% to $395.9 million from a year ago high of $452.3 million. Comparable sales also dropped by 13% compared to a drop of 14% for the same period last year. Net loss, on the other hand, came in at $76.8 million with net revenues dropping by 18% to $34.3 million.
Aeropostale Inc. (NYSE:ARO) ended the first quarter with cash value amounting to $24.5 million with $8.5 million in short term borrowings. For the second quarter, Aeropostale expects an operating loss of between $49 and $54 million.
