Delta Apparel Sells Junkfood Clothing Company
Supplier Delta Apparel, Inc. (PPAI 188431) has completed the sale of Junkfood Clothing Company, its vintage-inspired, licensed-graphics t-shirt business, to JMJD Ventures, LLC for approximately $28 million.
The sale proceeds include $25 million in cash at closing, with promissory note payments due between June 30 and March 30, 2018, for the remaining amount. The transaction does not include the sale of accounts receivable and certain other assets, or the assumption of trade payables and certain other liabilities. Net of selling expenses, Delta Apparel expects to realize a pre-tax gain of approximately $1 million on the sale, which would be recorded in its 2017 fiscal second quarter.
Delta Apparel Chairman and CEO Robert W. Humphreys says, “The Junk Food brand has broadened its consumer reach and awareness, and more than doubled its revenue since we acquired it in 2005. While we have enjoyed nurturing this brand over the years, the changing retail environment has made it more challenging to be a niche player in the licensed-graphics space. We are pleased to have the opportunity to sell Junk Food and further reduce our reliance on licensed properties. We expect to use the proceeds from the sale to lower our debt levels, continue our share repurchase program and provide capital for further investments in strategic growth opportunities, including the Salt Life brand and Art Gun.”