After filing Chapter 11 late last year, Forever 21 has reached a deal to sell its assets for $81 million.
The “stalking horse bidder” is a consortium made up of Simon Property Group, Brookfield Properties and brand management firm Authentic Brands Group. Once approved by a judge, the sale would close and include all of the retailer’s remaining stores and its beauty line RileyRose, among other assets.
Simon Property Group, the biggest mall owner in the U.S., is one part of the consortium and plans to turn things around at Forever 21, the same way it did for retailer Aeropostale, which it acquired in bankruptcy court.
“With Forever 21, we do think there is a business there,” said David Simon, chief executive officer, Simon Property Group in a call with analysts. “But it has to be turned around... We’ve got our work ahead of us. But if we are successful... we will make money at Forever 21. We make these investments for the sole purpose of we think there is a return on investment. We would not be attempting to do Forever 21 for the sole purpose of maintaining our rent. Forever 21 took its eye off the ball... primarily because of international growth. Obviously, the store size... got too big.”
Other bidders have until Feb. 7 to make any counteroffers. If any other bids are placed, an auction will be held on Feb. 10. Forever 21 is hoping to gain approval of the sale by Feb. 11.