MANUFACTURING
Joe’s Jeans to Seek Approval of Reverse-Merger Agreement
Joe’s Jeans, the publicly traded company in Los Angeles that makes blue jeans and other clothing, will be holding a stockholders’ meeting in January to approve a reverse merger that will see the company become the Differential Brands Group and traded on the Nasdaq.
In September, the financially struggling company, which was close to declaring bankruptcy, sold its flagship brand, Joe’s Jeans, to Sequential Brands Group and Global Brands Group Holding for $80 million. Funds from the sale were used to retire Joe’s Jeans’ debt.
Its other blue-jeans label, Hudson, remains with the company and is being merged with the high-end label Robert Graham. The two will be combined into the Differential Brands Group.
At the January meeting, stockholders will be asked to approve a 1-for-30 reverse stock split. That means for every share of Joe’s Jeans, stockholders get 30 shares in the new company.
A major stockholder in Joe’s Jeans is Joe Dahan, the label’s former creative director, who owns 17.3 percent of Joe’s stock. Dahan now works for Sequential Brands but has promised to vote his shares in favor of the merger. Peter Kim, founder and chief executive of Hudson, owns 10.6 percent of the stock.
When the reverse merger is complete, Michael Buckley, Robert Graham’s chief executive, will be the chief executive of the Differential Brands Group.
Also at the meeting, stockholders will be asked to approve naming five people to the new company’s board of directors. They are Sam Furrow, Joanne Calabrese, Kelly Hoffman, Suhail Rizvi and Kent Savage. They are the current board members for Joe’s Jeans.
Joe’s Jeans has struggled financially. Its third-quarter financial results showed it had a $5.65 million profit on $18.7 million in net sales compared with a $276,000 profit on net sales of $25.7 million for the year-earlier period.
But for the first nine months of the fiscal year, Joe’s Jeans had a net loss of $19.3 million on $61.3 million in net sales compared with a profit of $437,000 on $69 million in sales for the same period in 2014.
Joe’s Jeans started having financial problems in 2013 when it borrowed $90 million to buy Hudson for $97.6 million and then defaulted on its loans.
