Joe’s Jeans in Talks With Investment Group Over Acquisition
News sources are reporting that Joe’s Jeans, the Los Angeles premium-blue-jeans maker that bought Hudson Clothing nearlytwo years ago, is in talks to be acquired by an East Coast private equity firm.
The newswire service Dow Jones & Co. reported on June 25 that Joe’s Jeans, whose stock is close to being delisted on the NASDAQ after months of trading below $1 and has had trouble paying its sizable loans, is negotiating a deal with Tengram Capital Partners, which has offices in New York and Westport, Conn. Tengram co-founder William Sweedler is a former president and chief executive of Joe Boxer.
Dow Jones notes that the deal being discussed is for an acquisition price that is less than $100 million for both Joe’s Jeans and Hudson Clothing. Tengram is talking to lenders about financing the deal, Dow Jones reported.
Joe’s has been in financial trouble ever since it acquired Hudson Clothing for $97.6 million in 2013. It has defaulted on $90 million in debt used to purchase its one-time blue-jeans rival, which is also headquartered in Los Angeles and still headed as a separate entity by Peter Kim.
In January, Joe’s Chief Executive Officer Marc Crossman left after nine years at the company. He was replaced by interim CEO Sam J. Furrow Jr. on Jan. 19, who, less than a month later, exited the company. The current interim CEO is Sam J. Furrow Sr., who is chairman of Joe’s board.
On Feb. 13, Joe’s Jeans said in a Securities and Exchange Commission filing that its auditor, Moss Adams LLP, had raised substantial doubts about its ability to continue as a going concern and was threatened with liquidation. Joe’s, which is in discussions over its loan defaults, also said that if some kind of refinancing is not worked out, it may be forced into Chapter 11 bankruptcy.
As of Feb. 28, Joe’s Jeans reported in its quarterly report that it only had $1 million in cash on hand.
Most recently, Joe’s Creative Director Joe Dahan sold 23,310 shares of Joe’s stock at 20 cents a share on June 18. On the same day, Chief Financial Officer Hamish Sandhu sold 16,137 shares of stock for 20 cents a share. On June 25, Joe’s stock price closed at 25 cents a share, up 33 percent from the day before.