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Golden Gate Capital wins Eddie Bauer bankruptcy auction

The San Francisco investment firm offers $286 million for the outdoor-clothing retailer. It plans to keep most of the chain's 370 stores open.

July 18, 2009|Nancy Rivera Brooks

San Francisco investment firm Golden Gate Capital has won the bankruptcy auction for the Eddie Bauer chain with a $286-million offer, besting several liquidators with a plan to keep open most of the outdoor-clothing retailer's 370 stores in the U.S. and Canada.

Eddie Bauer Holdings Inc., based in Bellevue, Wash., attracted several bidders, including liquidators Great American Group, Hilco Consumer Capital and Gordon Bros. Group, as well as Iconix Brand Group Inc., which owns Rocawear clothing. CCMP Capital Advisors made the initial $202-million offer as a so-called stalking horse, a court-approved bidder who gets the action going in exchange for a fee, in this case $5 million.

The liquidators wanted to sell off the assets of Eddie Bauer, which opened its first store -- a Seattle sporting goods shop -- in 1920. Golden Gate has agreed to keep at least 300 stores open, Eddie Bauer said. The Golden Gate offer will be presented for court approval Wednesday.

This is Golden Gate's second time at the dance. In 2006, the private-equity firm teamed with Sun Capital Partners to acquire Eddie Bauer, but the $285-million deal didn't win approval from shareholders.

Eddie Bauer, which hasn't posted an annual profit in three years, filed for bankruptcy protection last month.

Although the proposed transaction is good news for Eddie Bauer shoppers, creditors and landlords, Eddie Bauer shareholders probably aren't celebrating. The Golden Gate payout would flow to creditors, leaving shareholders with nothing.


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