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Rockport files for bankruptcy, may sell assets to PE firm Charlesbank

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Rockport files for bankruptcy, may sell assets to PE firm Charlesbank

Rockport Co. is seeking bankruptcy protection, with private equity firm Charlesbank poised to take over ownership of the comfort shoe maker, The Wall Street Journal reported, citing court papers.

Citing the "evolving retail landscape" and a costly and time-consuming spin off from former owner Adidas AG, the Newton, Mass.-based company filed for Chapter 11 bankruptcy protection in the U.S. and Canada, according to the publication.

Interim CFO Paul Kosturos reportedly said in court papers that several stores purchased when the company was acquired by Berkshire Partners and New Balance performed "below expectations" in a tough retail market.

Rockport will seek court approval for as much as $80 million in bankruptcy financing, with plans to use part of the proceeds to repay existing lenders.

The Journal noted that Rockport agreed to sell its global wholesale assets, e-commerce platform and retail operations in Asia and Europe to Charlesbank, which will be the lead bidder in a court-supervised sale process. The deal, however, is contingent on better bids.

Charlesbank will have the chance to review Rockport's North American retail operations and decide whether it will opt to acquire some of those locations. Rockport, which operates roughly 60 stores in the U.S. and Canada, aims to shut down the North American stores that Charlesbank or another party would not acquire, subject to court approval, the Journal added.

To help it navigate through bankruptcy proceedings, Rockport set aside $20 million in new financing from existing bondholders, which include Crescent Capital Group LP, Corporate Capital Trust Inc., Oregon's public pension fund and funds tied to New York Life Investment Management LLC, according to a court filing. The retailer can also use an existing $60 million credit facility to continue operating through the sales process.

Rockport's equity owners currently include investment manager Crescent Capital, funds affiliated with New York Life, Corporate Capital Trust and Oregon Public Employees Retirement Fund.

The news comes on the heels of recent Chapter 11 filings by other footwear manufacturers such as Payless ShoeSource Inc., Nine West Holdings Inc., Walking Co., Shiekh Shoes, Aerosoles Inc. and Pinktoe Tarantula Ltd.

Richards Layton & Finger PA is Rockport's legal counsel, with Alvarez & Marsal serving as restructuring adviser and Houlihan Lokey Inc. serving as investment banker and financial adviser.