Liz Claiborne, Inc. (NYSE: LIZ) yesterday announced that it has entered into definitive agreements to sell its Liz Claiborne, Monet and Kensie brands, and has completed the sale of its Dana Buchman brand, for total cash proceeds of approximately $328 million, of which $308 million represents sale proceeds. The Company has also agreed with Donna Karan International to an early termination of its DKNYŽ Jeans and DKNYŽ Active license. Consummation of the Liz Claiborne, Monet and Kensie sale transactions is subject to customary closing conditions, and these transactions are expected to close in the fourth quarter of 2011.

Liz Claiborne and Monet Brands:

  • Agrees to sell the domestic and international trademark rights for the Liz Claiborne, Claiborne, Liz, Liz & Co., Concepts by Claiborne, LC, Elisabeth, LizGolf, LizSport, Liz Claiborne New York (LCNY) and Lizwear brands;
  • Agrees to sell the trademark rights for the US and Puerto Rico for the Monet brand;
  • Liz Claiborne, Inc. retains international rights for Monet;
  • LCNY and Lizwear trademarks will be licensed back royalty-free to Liz Claiborne, Inc. until July 2020;
  • Liz Claiborne, Inc. will be the exclusive supplier of jewelry to J.C. Penney for the Liz Claiborne and Monet brands; and
  • Total cash proceeds of $288 million include an advance of $20 million in exchange for the Company's agreement to develop exclusive brands for J.C. Penney.

Dana Buchman and Kensie Brands:

  • Completed the sale of the Dana Buchman brand to Kohl's;
  • Agrees to sell the Kensie, Kensiegirl and Mac & Jac brands to affiliates of Bluestar Alliance;
  • Aggregate cash proceeds of approximately $40 million for both transactions; and
  • Liz Claiborne, Inc. will be the exclusive supplier of jewelry to Kohl's for the Dana Buchman brand for two years.

DKNYŽ Jeans and DKNYŽ ActiveLicense:

  • Agrees to early termination of the DKNYŽ Jeans and DKNYŽ Active license with Donna Karan International; and
  • License will terminate at year end 2011, one year ahead of the scheduled license maturity.

The Company also is providing preliminary September 2011 direct to consumer comparable sales as follows:


Brand

September *

Juicy Couture

(5%)

Lucky Brand

24%

kate spade

114%

Mexx Europe

1%

Mexx Canada

(1%)


* Results are preliminary and subject to month-end closing adjustments.

William L. McComb, Chief Executive Officer of Liz Claiborne, Inc., said: "Since our Investor Day presentation back in April, we have discussed sale opportunities in our Partnered Brands segment, focusing on the value inherent in both existing Partnered Brands licensing agreements and standalone wholesale brands. Today's announcement brings those value creation opportunities to reality, resulting in $328 million in total cash proceeds, inclusive of sale proceeds of $308 million. These sale proceeds represent an implied multiple of nearly 8 times associated 2011 forecasted adjusted EBITDA. Consistent with our stated goal to de-lever the Company, these proceeds will be used to further reduce debt. These transactions, coupled with the previously announced Elizabeth Arden transaction and Mexx joint venture agreement with The Gores Group, underscore our focus on unlocking value for our stakeholders. After the closing of these transactions, we expect year end 2011 net debt to be in the range of $270 to $290 million."

Mr. McComb continued: "We are providing updates to our previously stated 2011 and 2012 adjusted EBITDA guidance to reflect our latest forecast and the impact of these transactions. Our previous 2011 adjusted EBITDA guidance range of $100 to $120 million has been revised to a pro forma range of $80 to $90 million. This pro forma approach revises 2011 and 2012 adjusted EBITDA guidance by eliminating full year profits and losses associated with recent portfolio changes. Our previous 2012 adjusted EBITDA guidance range of $180 to $220 million has been revised to a range of $130 to $150 million, which assumes that the Mexx joint venture transaction and the transactions associated with today's announcement close in the fourth quarter."

Mr. McComb concluded: "Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company, and today marks the culmination of these efforts. At the close of these transactions, at a time when most economists in the world are now agreeing that major European and the US markets are facing significant risks of another recession, we will be a more appropriately levered, more capital efficient, growth-oriented company. As such, we are exploring options for a new corporate name that will better reflect our keen focus on building and growing our three global lifestyle brands - Juicy Couture, Lucky Brand and kate spade. We will share the new name for the corporation at the appropriate time."

Liz Claiborne, Inc. will sponsor a conference call at 9:30am EDT on Wednesday, October 12th to discuss this transaction. The dial-in number is 1-888-694-4676 with pass code 18157122. The web cast and slides accompanying the prepared remarks can be accessed via the Investor Relations section of the Liz Claiborne website at www.lizclaiborneinc.com. An archive of the webcast will be available on the website. Additional information on the results of the Company's operations is available in the Company's Form 10-Q for the second quarter of 2011, filed with the Securities and Exchange Commission.

About Liz Claiborne, Inc.

Liz Claiborne, Inc. designs and markets a global portfolio of retail-based premium brands including Juicy Couture, kate spade, Lucky Brand and Mexx. The Company also has a refined group of department store-based brands with strong consumer franchises including the Monet family of brands, Kensie, Kensiegirl, Mac & Jac, and the licensed DKNYŽ Jeans and DKNYŽ Active brands. The Liz Claiborne and Claiborne brands are available at JCPenney and the Liz Claiborne New York brand designed by Isaac Mizrahi is available at QVC. Visit www.lizclaiborneinc.com for more information.

Learn more about Liz Claiborne Inc. at Apparel Search.