Ares Seeks Debt Deal to Back Takeover of Savers Thrift Chain
(Bloomberg) -- Ares Management Corp. is asking investors to back $600 million of debt to support its takeover of Savers, the retailer that offers secondhand clothes and household goods, according to people with knowledge of the situation.
The investment firm is sounding out the reception for a new seven-year term loan that would refinance Savers’ first- and second-lien debt, the people said, asking not to be identified discussing a private matter. Ares, which owns around 40% of Savers equity, agreed to buy out the remaining stake for around $563 million, the people said.
A representative for Ares declined to comment, and a representative for Savers wouldn’t comment beyond a statement that disclosed Ares’ backing for the company. Plans are in flux and could change based on negotiations, the people said.
Ares said it plans to take full ownership of Savers in a release Thursday that didn’t disclose specifics of the transaction. The private equity group will acquire the remaining ownership stake from funds managed by Crescent Capital Group, which will sell their majority position as part of the deal, according to the statement.
Savers is one of the largest for-profit thrift retailers in the world, with more than 21,000 employees and about 300 stores in North America and Australia. The company says it buys and resells “gently used merchandise in a department-store environment.”
The retailer says it diverts more than 700 million pounds of reusable clothing and textiles from landfills each year with annual sales averaging $1.2 billion.
Ares and Crescent took control of Savers through an out-of-court restructuring in 2019 that cut its debt by 40%. That deal provided Savers with new loans and a $165 million capital infusion from the two firms, which replaced previous private equity sponsors Leonard Green & Partners and TPG.
KKR & Co. and Ares backed $590 million of debt structured as first- and second-lien loans in the previous transaction. The deal also came with a $60 million revolving loan.
New York-based Ares manages $197 billion of assets while its private equity arm had $27.4 billion at year-end, according to the statement. Crescent, based in Los Angeles, manages about $30 billion of securities and private debt investments.
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