2013-Retrospective

Press Release

By Kenneth Frieze

2013 was an exciting year for Gordon Brothers Group!  While our work in the retail sector was vibrant, it was a breakout year for us outside of that heritage.  We took part in a wide array of compelling transactions, a few of which are highlighted below:

Firm-Wide Developments
 

     Acquisition of Emerald Technology Valuations. As the premier high technology valuation and disposition firm in the industry, Emerald’s expertise spans the fields of Biotech, Broadcasting, Electronic Manufacturing Services, Photovoltaic (Solar), Printed Circuit Board, Video Post-Production, Semiconductor and Telecommunications. This acquisition brought a new dimension to Gordon Brothers Group’s ability to unlock and deliver value to clients in these sectors.

GB Energy Parters    GB Energy Partners. We continued to broaden our industry reach in 2013 by launching GB Energy Partners, which combines the energy expertise of Gordon Brothers Group, Emerald Technology Valuations and Appraisal Systems, Inc., a firm specializing in appraisals of oil and gas related machinery and equipment that we acquired in September.  We now provide expertise across the full spectrum of energy sectors: oil, gas, coal, solar, wind, biofuels and nuclear. 

Gordon Brothers Europe    Launch of Valuation and Corporate Recovery Business. In May, we launched the Valuation & Corporate Recovery business of Gordon Brothers Europe. The group has built upon its strong momentum following the launch, attracting new talent under the direction of Gary Quaife and rapidly expanding its client base. In August, the group was voted Preferred Asset Valuer in a poll conducted by Business Money, in a testament to the group’s knowledge, skills and expertise, despite its very recent start.

Gordon Brothers Group    Leadership Enhancements. We were also pleased to introduce several enhancements to our senior leadership team, including Rafael Klotz’ return to the firm as Senior Managing Director. This past year also saw the appointments of veteran Gordon Brothers Group executives Bob Grosskopf and Rick  Edwards as Co-Presidents of the Retail Division.  In August, we announced the appointment of Kenji Tanaka as the new CEO of Gordon Brothers Japan. I was also personally honored to be named President of Gordon Brothers Group back in February. 

Gordon Brothers Europe Transactions 

Clerys     Clerys. We continued the turnaround of Clerys, a well-known Irish department store originally established in 1853. We purchased Clerys’ debt when the company fell into difficulty after the Irish property crash, establishing a new working capital facility and implementing a restructuring plan. While the company had begun to see a significant improvement in performance under the leadership of Gordon Brothers Europe, flood damage forced the store to close for an extended period. After an extensive remodeling effort, the iconic store re-opened its doors in November to thousands of visitors.
 
Blanco     Blanco. In June, we provided operational and capital support to Spanish fashion retailer Blanco, which had voluntarily filed for bankruptcy protection. Gordon Brothers Europe developed and implemented a program to alleviate immediate stock pressures and ensured most of the stores continued to operate while a buyer was sought. 

Retail Division Transactions 

Totes    
Totes. We were selected to manage the store closing process for 50 Totes Isotoner retail stores nationwide in 2013. Totes Isotoner, an international supplier of umbrellas, footwear and cold weather accessories, elected to wind down its retail division, which included all stores under the Totes, Totes Factory Store, Sunglass World and Sunglass Station brands. DJM Real Estate, the real estate affiliate of Gordon Brothers Group, performed lease mitigations for the company’s retail locations in conjunction with the store closing. 

Namco    

NAMCO / Branch Brook. We oversaw store closing sales of 14 locations across Pennsylvania, Maryland, Delaware and New Jersey for this pool, patio and game room retailer, operating under the NAMCO and Branch Brook banners. Gordon Brothers Group worked closely with the company to dispose of the company’s inventory in these locations and provide needed liquidity for the retailer.

Brand Division Transactions 

Coby Electronics     Coby Electronics. In August, we acquired all of the intellectual property, global trademarks and patents of Coby Electronics Corporation, a manufacturer of consumer electronics, in addition to all of the company’s inventory, fixtures and equipment. Building on our successful recent turnarounds of Polaroid, The Sharper Image and The Bombay Company, we have started on plans to rejuvenate the Coby Electronics brand. 

LinensNThings     Linens ‘N Things. In December, we announced the sale of the intellectual property assets of Linens ‘N Things, in conjunction with our joint venture partners. After Linens ‘N Things filed for bankruptcy in 2008, Gordon Brothers Group and its partners disposed of the company’s assets and subsequently acquired its intellectual property through a joint venture, gradually rebuilding the brand as an online retailer. 

DJM Real Estate Transactions 

Fresh and Easy     Fresh & Easy. DJM Real Estate was retained to manage the disposition of the Fresh & Easy real estate. The project consists of marketing 98 leases and 55 fee owned properties, including ground leases, building leases, undeveloped land parcels, retail buildings and distribution centers. All properties are located in Arizona, California and Nevada and range from 10,000 to 777,100 square feet with a combined total of approximately 2.8 million square feet. 

the Cavalier Hotel     Cavalier Hotel. Together with our partner, CBRE Hotels, we successfully sold the iconic Cavalier Hotel on the oceanfront of Virginia Beach, Virginia. The 21.2 acre compound originally constructed in 1927 was positioned as a unique mixed use redevelopment opportunity and consisted of the original 115-room Cavalier on the Hill, the 282-room Oceanfront Hotel and a conference center. The property was on the market for less than five months before being sold in its entirety. The new owner plans to restore the Cavalier Hotel and redevelop its sister properties under a $260 million project. 

GB Credit Partners Transactions
 

Brandsmart USA     BrandsMart. In April 2013, GB Credit Partners provided a $30 million senior secured term loan to BrandsMart U.S.A., a retailer of consumer appliances, electronics and housewares. Drawing on the insights of both our Retail Division and DJM Real Estate, GB Credit Partners developed a solid understanding of the company’s collateral and its business plan and extended a facility backed by real estate and inventory under a very short timeframe. As a result, the company managed to keep its real estate holdings intact as opposed to disposing of select properties in an effort to generate liquidity. 

Dana Transport Inc.     Dana Transport. GB Credit Partners was approached by CIT Equipment Finance to provide a “last-out” tranche in a $50 million term loan to Dana Transport, a full-service contract hauler of liquid and dry products. Our Commercial & Industrial Division provided additional research and due diligence, ensuring that the transaction could be completed in a timely manner. The term loan, secured by a second lien position on over 9,000 pieces of Dana Transport’s trucking equipment, allowed the company to improve its operations by focusing more on the business and less on its capital structure. 

Appraisal & Valuation Division Transactions 

Green Field Energy     Green Field Energy Services. In October, the appraisal and valuation platform of GB Energy Partners provided an appraisal and supported GB Credit Partners in co-agenting a $30 million DIP facility to Green Field Energy Services, a well service provider specializing in hydraulic fracturing, cementing, pressure pumping and coiled tubing. By analyzing the company’s assets and their net orderly liquidation value, GB Credit Partners was able to confidently extend crucial financing in a timely fashion. 

Quiksilver     Quiksilver. We provided a retail and wholesale inventory appraisal of Quiksilver in the US, Canada, Japan and Australia. The project was notable in terms of its broad international scale, as we leveraged our overseas operations to analyze Quiksilver’s assets in multiple countries and deliver a comprehensive result to the client. 

Commercial & Industrial Division Transactions 

Commerce Corp.     Commerce Corporation. Commerce Corporation, a national distributor of lawn and garden products with annual sales in excess of $100 million, encountered difficulty in late 2012 when it lost a key vendor. The company’s lenders approached us to explore various options up to and including an orderly wind down of the business. In 2013, we successfully managed all aspects of the wind down, including renegotiating vendor and customer agreements, preparing wind-down budgets, and managing logistics, distribution and sales functions. 

Gordon Brothers Japan Transactions 

    Consumer Electronics Retailer. In September, we undertook a large scale disposition project for a major consumer electronics retailer, with inventory totaling $39 million at retail. The project enabled the company to monetize unwanted assets and streamline its ongoing operations. 

    Consumer Electronics Manufacturer. On a monthly basis throughout 2013, we provided an inventory and machinery & equipment appraisal for a major worldwide manufacturer of appliances, televisions, computers and other consumer electronics items. The project was noteworthy in terms of the value and volume of assets, totaling $14 billion. 

Conclusion 

In 2014, Gordon Brothers Group will continue to monitor the converging trends and events that impact our markets and shape the global lending, valuation and disposition environment.

To our clients and partners, we thank you for a terrific 2013.  We look forward to working with you again in 2014 to identify risks and capitalize on opportunities across the full spectrum of industry sectors we serve.