Tory Burch Secures Funding for Stake Repurchase
Tory Burch LLC is preparing a leveraged financing package of around $700m to fund a partial management buyout of General Atlantic’s stake in the company, according to a report by Bloomberg. The New York-based luxury fashion group plans to use approximately $346m of the proceeds to buy out the private equity firm’s interest, with the transaction arranged by Bank of America and lender commitments expected later this week.
Background on the Investment
General Atlantic first invested in Tory Burch in 2012 as part of a settlement linked to a legal dispute involving founder Tory Burch and her former husband, Chris Burch. The size of General Atlantic’s remaining holding has not been disclosed, but the current deal represents a partial buyout of this long-held stake. This move follows the company’s history of using leverage to facilitate ownership changes, as noted by credit rating agencies.
Details of the Financing Structure
The financing includes a seven-year term loan marketed at a spread of 375 to 400 basis points over the benchmark, along with a $300m revolving credit facility. Proceeds from the package will also be used to refinance existing debt, providing the company with resources for both the stake repurchase and debt management. According to Private Equity Wire, this structure is designed to support the transaction’s goals while addressing the company’s financial needs.
Views from Credit Rating Agencies
S&P Global Ratings highlighted that Tory Burch has a history of using leverage for ownership changes while maintaining relatively disciplined debt management. In contrast, Moody’s revised its outlook on the company to negative, citing higher leverage and reduced liquidity after the transaction, as well as modest growth expectations over the next 12 to 18 months due to a challenging operating environment in the global luxury sector. Moody’s also pointed to competitive pressures in luxury retail that could affect expansion and investment requirements. As widely known in the finance industry, such rating adjustments often reflect broader market dynamics in debt-financed deals.
Implications for the Luxury Sector
The deal involves sponsor exits and shareholder reshuffling, with companies in luxury retail increasingly turning to debt markets for ownership transitions and recapitalizations. According to Private Equity Wire, this transaction exemplifies how firms like Tory Burch manage stakeholder interests through leveraged financing.
