Stein Mart has entered into a buyout agreement with a private equity firm.
The ailing off-price retailer said it agreed to be taken private by a unit of Kingswood Capital Management LP for $0.90 a share in cash, which represents a premium of approximately 38% to Stein Mart’s closing stock price on January 30, 2020.
Stein Mart, which operates 283 stores in 30 states, has struggled in increase sales in today’s competitive retail markets. Its shares have been trading below $1 since last spring. In early January, the Company was granted an additional 180-day grace period, or until July 6, 2020, to regain compliance with Nasdaq’s minimum bid price requirement.
Kingswood will acquire all of the stock not already owned by affiliates of Jay Stein, who is Stein Mart’s former CEO and current chairman of its board, and related investors. As part of the transaction, an entity managed by Stein will contribute its equity and will indirectly own one-third of Stein Mart after the deal closes.
“The special committee and its advisors conducted a thorough and independent process to review the Company’s strategic alternatives and identify a transaction that would maximize shareholder value,” said Richard L. Sisisky, Stein Mart board member and chairman of the special committee. “We believe that this transaction is in the best interest of all Stein Mart stakeholders, including our many loyal employees.”
The deal will be financed by Wells Fargo Bank, National Association and Pathlight Capital LP, and with equity provided by affiliates of Kingswood. PJ Solomon is serving as financial adviser to the special committee.
The transaction is expected to close in the first half of 2020 and is subject to approval by Stein Mart shareholders.
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