Stern Partners to acquire troubled Canadian retail chain Comark

Comark, the parent of fashion brands Ricki’s, Bootlegger and Cleo, announced that it as agreed to sell the business to Stern Partners. The deal is expected to close in August, at which time the assets of the Mississauga, Ontario-based company will be transferred to Pacific West Commercial Corp, a Stern Partners’ affiliate.

No financial terms were released. Reuters reported in March 2013 that an auction for Comark could fetch up to $400 million.

Established as a family-run operation in 1976, Comark has been backed for more than a decade by KarpReilly, a U.S. private equity firm that invests in the consumer sector. KarpReilly’s predecessor, Saunders Karp & Megrue, bought Comark for an undisclosed sum in February 2005.

In a statement, Stern Partners said it intends to continue operating all three retail banners under the Comark umbrella. The company’s private-label and branded apparel products will continue to be sold through stores across Canada. “Substantially all” employees will be offered jobs by the new owner, the statement said.

Earlier this year, Comark announced it had obtained bankruptcy protection under the federal Companies’ Creditors Arrangement Act. Alvarez & Marsal Canada was tasked with monitoring the company as it began restructuring.

Comark subsequently initiated a process for soliciting proposals from prospective strategic buyers and financial investors. The proposed sale to Stern Partners came roughly four months later.

Comark said the purchase price is expected to repay its secured lender, Salus Capital, in full. Any outstanding funds will be made available to unsecured creditors. The company, as of April 2015, had about $62 million in outstanding debt through a term loan and a revolving credit facility from Salus. The debt is secured by Comark’s assets, according to a court filing. Salus also agreed to provide Comark with debtor-in-possession financing as part of the bankrutpcy process, the court filing said.

Stern Partners, based in Vancouver, invests in middle-market and larger companies in a variety of industries. The firm was founded and is led by Canadian entrepreneur and lawyer Ronald Stern. It has invested in more than 14 stand-alone businesses with annual revenues ranging from $20 million to $300 million.

Stern Partners has a history of making retail investments. Its current portfolio companies include Warehouse One Clothing, a seller of denim and casual wear, and Urban Barn, a retailer of home furniture and furnishings.

Stern Partners declined to comment on this story. KarpReilly was not available for comment prior to publication.