California Apparel News

Two years after selling its majority stake in the Mexx retail chain to The Gores Group, Fifth & Pacific Cos. has agreed to pay the Los Angeles private-equity firm

$22 million to settle a complaint filed earlier this year in connection with the sale.

Fifth & Pacific, which used to be called Liz Claiborne Inc., said in regulatory documents filed Aug. 2 that it agreed to pay The Gores Group to reimburse it for alleged breaches of the merger agreement, including breaches of tax and tax-related covenants.

The Gores Group, which bought an 81.25 percent stake in Mexx for $25 million in cash and $60 million in debt in late 2011, also maintained there had been breaches of interim operating covenants, breaches of reimbursement obligations related to employee bonuses and working-capital adjustments.

The complaint also included a demand for payment of previously disclosed dispute-resolution proceedings that were required to be made under the merger agreement, maintaining that Fifth & Pacific owed The Gores Group about $5 million.

As part of the settlement, Fifth & Pacific sold Gores its non-controlling interest in Mexx Lifestyle for $4 million.

Liz Claiborne acquired Mexx, which has stores primarily in Europe, in 2001 for $234 million. The 2011 sale was part of Liz Claiborne’s turnaround strategy a few years ago, which included selling off a number of brands, such as C&C California, Laundry by Shelli Segal and Enyce.

Financial experts have said Fifth & Pacific is exploring the sale of two more labels in its dwindling collection—Lucky Brand and Juicy Couture. That would leave Fifth & Pacific with just one major brand, Kate Spade.

Fifth & Pacific has had a number of difficult years. Last year, it had a $74.5 million loss on $1.5 billion in revenues. In 2011, the red ink flowed even more with a net loss of $172 million on $1.52 billion in revenues. In 2010, the company saw a net loss of

$251 million on $1.62 billion in revenues.