Capmark Financial Group Inc. announced that it has entered into a series of agreements pursuant to which it will acquire Bluestem Brands, Inc. (“Bluestem”), a multi-brand, online retailer of name-brand and private label general merchandise serving low-to-middle income consumers on a nationwide basis. Bluestem operates through its Fingerhut and Gettington.com retailing brands, each of which offers a large selection of merchandise with a variety of payment options to provide customers with the flexibility of paying over time. Bluestem also operates through PayCheck Direct, an employee purchase program. For the 52-week period ended at the conclusion of Bluestem’s second fiscal quarter on August 1, 2014, Bluestem had sales of $943 million, an increase of 25.4% over $752 million for the 52-week period ended August 2, 2013.
Under the terms of the transaction, Capmark will acquire Bluestem for approximately $565 million in cash, subject to various pre-and post-closing adjustments. The Company expects to fund the purchase price and associated transactional expenses with cash on hand, an equal amount of cash invested in the Company by affiliates of Centerbridge Partners, L.P. (“Centerbridge”) through the exercise of warrants, and a $300 million term debt facility to be issued by Bluestem and led by Credit Suisse and Jefferies Finance LLC. Certain members of Bluestem’s management team are also providing capital for the transaction. In addition, Bluestem will have upon closing a new $80 million asset-based lending facility led by U.S. Bank National Association.
Upon consummation of the acquisition, Steve Nave, Bluestem’s Chief Executive Officer, will become Chief Executive Officer of Capmark. Bill Gallagher and Tom Fairfield, the Company’s current Chief Executive Officer and Chief Operating Officer, respectively, will remain with Capmark with responsibility for the continued management of the Company’s legacy assets. Gene Davis will remain the Company’s Executive Chairman of the Board, and the Board will be expanded to include Mr. Nave and additional representatives of Centerbridge, as contemplated by the previously announced investment agreement between the Company and Centerbridge.
Commenting on the transaction on behalf of Capmark, Davis said, “The acquisition of Bluestem, with its well-known Fingerhut brand and its skilled management team, is an exciting opportunity for Capmark, and another step in the Company’s continuing efforts to maximize value for its shareholders.”
Nave remarked, “Joining with Capmark offers an excellent opportunity for Bluestem to enhance its ability to deliver industry-leading growth and drive future shareholder value.”
Capmark is being advised by its financial adviser Houlihan Lokey Capital Inc. and by its counsel Kramer Levin Naftalis & Frankel LLP. Bluestem is being advised by its financial advisor Lazard Middle Market and by its counsels Skadden Arps Slate Meagher & Flom LLP and Faegre Baker Daniels LLP. Centerbridge is being advised by its financial advisor Jefferies. Centerbridge and Capmark are also being advised by their counsel Weil Gotshal & Manges LLP.
Capmark is focused on managing its existing assets and business and potentially acquiring one or more businesses with a view to maximizing shareholder value. Capmark is headquartered in Horsham, Pennsylvania and operates principally in North America.
Bluestem Brands, Inc. is a multi-brand, online retailer of a broad selection of name-brand and private label general merchandise serving low-to-middle income consumers nationwide.