City Chic has announced that it has successfully completed a $80 million placement, with the funds set to be used to acquire US plus-sized retailer Catherines from Ascena Retail Group.
The news confirms media speculation from early July which suggested that City Chic was preparing to acquire, "a distressed American retailer, and is mulling an equity raising to help make the acquisition."
Selected as the Stalking Horse Bidder for Catherines - which has been placed into Chapter 11 Bankruptcy - City Chic made an upfront cash consideration offer of US$16 million, subject to an inventory adjustment, for the business' eCommerce assets.
In the 12 months to April 2020, Catherines generated online sales revenue of US$67 million, equating to one third of the business' sales.
City Chic also plans to use the placement funds to further strengthen its balance sheet and accelerate its growth globally.
City Chic CEO and MD Phil Ryan said that the business was thrilled with the equity raising.
"We are very pleased with the success of this equity raising, which is a strong endorsement of City Chic's customer-centric business model and growing global market presence.
"We are excited about the opportunity to acquire the eCommerce assets of Catherines, a well-known plus-size brand with a deep history and strong customer following in the US market.
"The potential acquisition of Catherines meets our strategic objectives of scaling our business across geographies and plus-size segments.
"The acquisition of the eCommerce assets of US plus-size retailer Avenue in October 2019 provides us with a blueprint for expansion and an understanding of the benefits of deploying our lean, customer-centric operating model to drive revenue growth and cost efficiencies.
"We would like to thank our existing shareholders for their ongoing support and welcome new shareholders to the register," he said.
City Chic will now undertake an additional non-underwritten Share Purchase Plan (SPP).
On Thursday July 23, City Chic will offer all eligible shareholders the opportunity to participate in the SPP.
The SPP is capped at $30,000 per shareholder and City Chic is aiming to raise approximately $10 million.
If City Chic is the successful acquirer of Catherines - subject to US Bankruptcy Court approval and purchase agreement conditions being met - the business expects the completion of the acquisition to take place late in the third quarter or early fourth quarter 2020.