EX-99.1 2 jcg-ex991_25.htm EX-99.1 jcg-ex991_25.pptx.htm

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Project Monet Company Proposal Overview CONFIDENTIAL W:\Restructuring\Co-Active\J.Crew\Presentations\2019.09.14 - Proposal Blowout\Revised Company Proposal Materials_vBlowout.pptx Time Stamp : 9 March 2017 10:42:26 Exhibit 99.1

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By accepting this presentation, recipients acknowledge that they have read, understood and accepted the terms of this Disclaimer. This presentation is subject to the confidentiality provision set forth in the recipients’ applicable Non-Disclosure Agreement. This presentation is the property of, and contains the proprietary and confidential information of J. Crew Group, Inc. and its subsidiaries (collectively, the "Company"), as well as proprietary and confidential information regarding the Company’s business related to its Madewell brand (“Madewell”) and the businesses of the Company other than Madewell (“J. Crew”), each on a standalone basis. This presentation is being provided for informational purposes only and is intended solely to facilitate a discussion regarding a potential restructuring of the Company’s indebtedness. No representation or warranty, express or implied, is or will be given by the Company or its affiliates, directors, officers, partners, employees, agents or advisers or any other person as to the accuracy, completeness, reasonableness or fairness of any information contained in this presentation and no responsibility or liability whatsoever is accepted for the accuracy or sufficiency thereof or for any errors, omissions or misstatements, negligent or otherwise, relating thereto. No information included in this presentation constitutes, nor can it be relied upon as, legal, tax, investment or other advice. Recipients should consult their independent advisors. This presentation includes summaries of existing instruments, agreements and other documentation. These summaries do not constitute, and cannot be relied upon for, legal, tax, investment or other advice and the Company accepts no responsibility or liability whatsoever for the accuracy or sufficiency thereof or for any errors, omissions or misstatements, negligent or otherwise, relating thereto. Recipients should read the terms of the instruments, agreements or other documentation underlying such summaries in their entirety. Accordingly, this presentation should not be relied upon for the purpose of evaluating the performance of the Company or for any other purpose, and neither the Company nor any of its affiliates, directors, officers, partners, employees, agents or advisers nor any other person, shall be liable for any direct, indirect or consequential liability, loss or damages suffered by any person as a result of this presentation or their reliance on any statement, estimate, target, projection or forward-looking information in or omission from this presentation and any such liability is expressly disclaimed. In all cases, interested parties should conduct their own investigation and analysis of the Company and the information contained herein. This presentation should not be considered as a recommendation by the Company or any affiliate or other person in relation to the Company or any of its subsidiaries, nor does it constitute an offer to sell or a solicitation for an offer to buy the securities, assets or business of the Company, J. Crew or Madewell nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction or pursuant to an exemption therefrom. This presentation shall not form the basis of any contract. Any references to any future or proposed transaction are for illustrative purposes only and the terms of any such transaction should it occur may be materially different than the terms in this presentation. This presentation contains forward-looking statements that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact or relating to present facts or current conditions included in this presentation are forward-looking statements. Forward-looking statements give the Company’s current expectations and projections relating to the Company’s, J. Crew’s and/or Madewell’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “seek,” “plan,” “intend,” “believe,” “contemplate,” “assume,” “will,” “may,” “could,” “would,” “continue,” “likely,” “should,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events but not all forward-looking statements contain these identifying words. Risks, uncertainties and other factors may cause future results to differ materially from these forward-looking statements, and potentially adversely from the historical results contained herein. You are cautioned not to place undue reliance on the utility of the information in this presentation as a predictor of future performance of the Company or Madewell, as projected financial and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond the Company’s control. All information herein speaks only as of (1) the date hereof, in the case of information about the Company, J. Crew or Madewell, (2) the date of such information, in the case of information from persons other than the Company. The Company does not undertake any duty to update or revise the information contained herein, publicly or otherwise. The Company has not independently verified any third party information and makes no representation as to the accuracy or completeness of any such information. The historical financial information in this presentation includes information that is not presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. Non-GAAP measures in this presentation may be calculated in ways that are not comparable to similarly titled measures reported by other companies. THIS PRESENTATION MAY CONTAIN MATERIAL, NON-PUBLIC INFORMATION WITHIN THE MEANING OF THE UNITED STATES FEDERAL SECURITIES LAWS WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES AND THEIR RESPECTIVE SECURITIES. All amounts in this presentation are in USD unless otherwise stated. Disclaimer CONFIDENTIAL Company proposal overview

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Company Proposal — Transaction Overview Project Monet The materials contained herein outline the Company’s proposal to the Ad Hoc Group with respect to the recapitalization of the Company’s balance sheet in conjunction with a separation of J.Crew and Madewell and concurrent proposed IPO of a portion of Madewell’s equity (the “Company Proposal”) The Company Proposal is premised upon the simultaneous execution of i) the separation of J.Crew and Madewell, ii) a proposed IPO of a portion of Madewell’s equity, iii) a proposed issuance of new debt at Madewell, iv) the creation of a special purpose vehicle (the “Chinos SPV”) that holds J.Crew equity and Madewell equity not sold in the proposed IPO, and v) the recapitalization of the Company’s balance sheet (collectively, the “Transactions”) To facilitate the Transactions, the Ad Hoc Group would execute a transaction support agreement (the “TSA”) with the Company, whereby the Ad Hoc Group agrees to provide the required consents and tender its holdings (as appropriate) Company Proposal Overview Legal Separation Legal separation of J.Crew and Madewell effectuated via a taxable spinoff of the J.Crew business J.Crew and Madewell execute transition service agreements wherein J.Crew agrees to provide certain business functions and services at cost to Madewell to facilitate ongoing operations post-separation Madewell IPO and New Debt Issuance1 IPO of Madewell in which 40% of its equity is sold in the public markets Issuance of $500 million of secured debt (the “New Madewell Secured Debt”) Chinos SPV Chinos SPV to hold i) J.Crew equity contributed by existing shareholders, ii) Madewell equity that is not sold in the IPO, and iii) New Extended Notes (as defined below) Existing shareholders to own 100% of Chinos SPV common equity Recapitalization of Existing Obligations The ABL will be repaid in cash in full Consenting Term Loan Lenders will exchange a portion of their holdings into a senior tranche of new preferred equity securities issued by the Chinos SPV and receive cash for the remainder of their claim2 The IPCo Notes, Series A and B Preferred Stock will be converted into tranches of new preferred equity securities issued by the Chinos SPV and governed by a liquidation preference waterfall that aligns with the current priority waterfall with respect to both J.Crew and Madewell value The IPCo Notes will be exchanged for notes with longer maturities (the “New Extended Notes”), which would then be contributed to the Chinos SPV by the IPCo Noteholders in exchange for preferred securities issued by the Chinos SPV Summary Transaction Structure 1.Information shown for illustrative purposes only. 2.Term Loan exchange mechanics under review by counsel.

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40%1 Old IPCo Notes2 $--mm Company Proposal — Pro Forma Corporate Structure Post-Separation Project Monet The chart below provides a high level summary of the Company’s pro forma legal structure post-separation as of the Closing Date: Pro Forma Corporate Structure Madewell Subs NewCo J. Crew Operating Corp. Chinos Intermediate Holdings A, Inc. J. Crew Group, Inc. J. Crew Inc. Public Foreign Subs Other Domestic Subs J. Crew International, Inc. J. Crew Brand, LLC J. Crew Domestic Brand, LLC J. Crew Brand Corp. J. Crew International Brand, LLC Company Proposal Overview New Madewell ABL Facility $--mm New Madewell Secured Debt $500mm $250mm New J.Crew ABL Facility $--mm Note:SPV structure shown herein subject to additional legal diligence. Summary corporate structure, for illustrative purposes, does not reflect all entities. 1.Information shown for illustrative purposes only. 2.For illustrative purposes only, assumes 100% participation of IPCo Notes in the exchange. Guarantee Chinos SPV Chinos Holdings, Inc. 60% Other Equity Holders Sponsors 85% 15% New Extended Notes2 $353mm First Priority Collateral Support Series A $291mm Series B $148mm Series C $329mm Series D $23mm Series E $205mm 100% Pledge of Chinos SPV Common Equity to Old IPCo Notes IPCo Noteholders Contribute New Extended Notes to Chinos SPV

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Company Proposal — Overview of Chinos SPV Project Monet Company Proposal Overview As of immediately prior to the consummation of the transactions contemplated by this proposal (and, for the avoidance of doubt, includes accrued and unpaid interest). Includes $276 million on account of Term Loans exchanged into New Chinos SPV Series A, and a $15 million participation fee payable in New Chinos SPV Series A. The Chinos SPV would be capitalized with five tranches of new preferred equity securities that have liquidation preferences according to the current priority waterfall with respect to both J.Crew and Madewell value The Chinos SPV preferred securities would be repaid in cash with the net proceeds from any monetization of i) Madewell equity or J.Crew equity or ii) the repayment of the New Extended Notes, according to the liquidation preference waterfall The dividend rates for the New Series A and New Series B would be determined based on the Madewell TEV at IPO pricing, and calculated according to the Madewell TEV Grid outlined below: Chinos SPV Capitalization – Terms Dividend Rate (PIK) Liquidation Preference Preferred Stock Year 1 Year 2 Year 3 Year 4 Year 5 Onwards Initial Issue Amount1 Holders Maturity Date Madewell Equity J.Crew Equity & New Extended Notes New Series A Madewell TEV ≥ $2,825mm L+322bps L+500bps L+650bps L+800bps NA $291mm2 Term Loan 10/29/23 First Third < $2,825mm ≥ $2,525mm Rates increase 10 bps per $25mm reduction in the Madewell TEV NA < $2,525mm Rates increase 14 bps per $25mm reduction in the Madewell TEV NA New Series B Madewell TEV ≥ $2,825mm 13.00% 13.00% 14.00% 14.00% 14.00% $148mm Amount of IPCo Intercompany Note IPCo Notes 10/29/24 Second First < $2,825mm ≥ $2,525mm Rates increase 10 bps per $25mm reduction in the Madewell TEV < $2,525mm Rates increase 14 bps per $25mm reduction in the Madewell TEV New Series C 7.00% 7.00% 7.00% 10.00% 12.00% $329mm Amount of Series A and B Preferred Stock Preferred Equity Perp. Third Fourth New Series D 7.00% 7.00% 7.00% 10.00% 12.00% $23mm Intercompany Preferred Stock in excess of Series A and B Preferred Stock Common Equity Perp. Fourth Fifth New Series E 13.00% 13.00% 14.00% 14.00% 14.00% 205mm Amount of IPCo Notes in excess of IPCo Intercompany Loan IPCo Notes 10/29/24 Fifth Second Series B Series E Series A 2 Series C Series D Liquidation preference 3 4 5 1 60% 100% Existing Common Equityholders Chinos SPV Madewell J.Crew Series A Series B Series C Series D Series E New Extended Notes 100% Series E Series B 2 Series A Series C 3 4 1 Series D 5 Simplified Chinos SPV Org Structure

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Project Monet Company Proposal Overview Company Proposal — Comparison vs. Ad Hoc Group Proposal Calculated as: (Madewell Debt + Applicable Chinos SPV Debt / (1 - % Madewell IPO Float)) / Madewell Enterprise Value. Coupon and warrants determined based on Chinos SPV LTV through the New Series A and New Series C, as appropriate. Coupons compound semiannually. Form of equity consideration subject to further tax and legal diligence. Represents retained Madewell Common Equity held in the Chinos SPV. New Series A and New Series B rates do not include any adjustments on account of potential reductions in the Madewell TEV below $2,825 million. Includes $276 million on account of Term Loans exchanged into New Chinos SPV Series A Preferred Stock and a $15 million participation fee payable in New Chinos SPV Series A Preferred Stock. Includes par plus accrued and make-whole premium of ~$69 million. The table set forth below provides a comparison of the key economic terms and priority ranking of the Chinos SPV securities contemplated in the Company Proposal versus the Ad Hoc Group Proposal Under the Company Proposal, the effective PIK dividend rate of the Chinos SPV securities is based on amount of time since the Closing Date (and for New Series A and New Series B, the Madewell TEV at IPO), versus “Madewell LTV”1 at issuance under the Ad Hoc Group Proposal The PIK dividend rates for the New Series A and New Series B shown below assume a Madewell TEV at IPO of greater than or equal to $2,825 million (and therefore reflect the first tier of the Madewell TEV Grid) Importantly, the Company Proposal does not contemplate i) modifications to the existing waterfall or ii) the issuance of warrants to Chinos SPV securities, as reflected in the Ad Hoc Group Proposal Lien Priority Liquidation Preference Initial Issuance Coupon (PIK)2 Warrants2 Maturity Madewell Equity3 J.Crew Value Initial Issuance PIK Dividend (Grid Tier 1)4 Warrants Maturity Madewell Equity3 J.Crew Value New Series A $276mm 9.00% to 12.00% 10.0% to 17.5% 10/29/22 First Second $291mm5 L+322bps to L+800bps None 10/29/23 First Third New Series B $422mm6 13.00% to 16.00% 10.0% to 17.5% ~3 years After New Series A Second First $148mm 13.00% to 14.00% None 10/29/24 Second First New Series C $200mm 13.00% to 16.00% None ~3 years After New Series B Third Third $329mm 7.00% to 10.00% None Perpetual Third Fourth New Series D $152mm 13.00% to 16.00% None ~3 years After New Series C Fourth Fourth $23mm 7.00% to 10.00% None Perpetual Fourth Fifth New Series E NA NA NA NA NA NA $205mm 13.00% to 14.00% None 10/29/24 Fifth Second Chinos SPV Capitalization — Key Terms Company Proposal Ad Hoc Group Proposal (7/31/19)

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Project Monet Company Proposal Overview Revised Company Proposal — New Series A and B Dividend Rates ($ in millions) The chart below illustrates the PIK dividend rates on the New Series A and New Series B according to the Madewell TEV Grid in year one based on a range of Madewell valuations The dividend rates below are based on the Madewell TEV Grid and threshold values In a scenario in which the IPO is priced based on a Madewell TEV between $2,525 million and $2,825 million, the initial dividend rates begin to increase at a rate of 10 basis points per $25 million decrease in the Madewell TEV In a scenario in which the IPO is priced based on a Madewell TEV of less than $2,525 million, the dividend rates begin to increase at a more accelerated rate of change (14 basis points per $25 million decrease in the Madewell TEV below $2,525 million) New Series A Initial PIK Dividend Rate New Series B Initial PIK Dividend Rate 10 basis point increase per $25 million decrease 14 basis point increase per $25 million decrease 10 basis point increase per $25 million decrease 14 basis point increase per $25 million decrease Madewell TEV Madewell TEV $2,925 $2,925

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Est. Amt. Outstanding (10/29/19)1 Proposed Treatment ABL [Redacted]2 Paid in full in cash at par plus accrued interest at the non-default rate Term Loans $1,372mm Consenting Term Loan Lenders exchange a portion of their Term Loans into New Chinos SPV Series A Preferred Stock and receive the balance of their claim (par plus accrued interest at the non default rate) in cash3 The amount of cash paydown will equal the Madewell IPO and Madewell Secured Debt proceeds less i) the outstanding ABL balance (including applicable fees and accrued and unpaid interest), ii) all fees and expenses (including fees and expenses of professionals) incurred in connection with the Transactions, iii) if necessary, a cash tax reserve, iv) if necessary, a reserve to prefund any Old IPCo Notes principal and interest, and v) if necessary, the par amount plus applicable accrued interest at the non-default rate of non-consenting Term Loan Lenders The amount of Term Loans being exchanged into New Chinos SPV Series A Preferred Stock will equal the remaining Term Loan claim (par plus accrued interest at the non-default rate) after giving effect to the cash paydown Consenting Term Loan Lenders would also receive their pro rata share of a $15 million participation fee, which is payable in New Chinos SPV Series A Preferred Stock on the Closing Date Non-Consenting Term Loan Lenders will be paid in full in cash at par plus accrued interest at the non-default rate IPCo Notes $353mm Exchanged into New Extended Notes at par plus accrued interest at the non-default rate with the following terms4: Issuer: Chinos Intermediate Holdings A, Inc. (“Chinos A”) Guarantors: J.Crew International Brand, LLC; J.Crew Brand Corp.; J.Crew Brand Intermediate, LLC and J.Crew Domestic Brand, LLC (each of the foregoing, the “IPCo Guarantors”) Maturity: Extended by 3.25 years to December 2024 Interest: 13.00%, paid-in-kind through September 15, 2021; thereafter, 6.00%, paid-in-kind Collateral: A first lien on all assets of the IPCo Guarantors, subject to customary exceptions and exclusions Call Protection: Callable at 105% until September 2021 (Old IPCo Notes’ maturity) and at 100% thereafter Exit Consents: Agree to amendments of Old IPCo Notes indenture that would i) authorize forbearance from payments (other than those payments necessary to service the Old IPCo Notes) under IP license agreements through extended maturity, ii) release existing collateral, including the 8.50% Senior PIK Toggle Notes due 2020, iii) consent to waiver of a right to accelerate Old IPCo Notes, and iv) remove all covenants permitted to be amended Minimum Tender Threshold: 95%, which can be lowered by the Company in its sole discretion Extending IPCo Noteholders to contribute New Extended Notes to Chinos SPV in exchange for $148 million of New Chinos SPV Series B Preferred Stock and $205 million of New Chinos SPV Series E Preferred Stock At the Company’s option, receive cash at 105% of par at closing in lieu of Preferred Stock Offered to the extent that net cash proceeds from the Madewell IPO and New Madewell Secured Debt issuance exceed the Transaction Threshold Amount “Transaction Threshold Amount” is the sum of i) outstanding ABL (including accrued interest), ii) outstanding Term Loans (including accrued interest), iii) all fees and expenses (including fees and expenses of professionals) incurred in connection with the Transactions, iv) if necessary, a tax cash reserve, and v) if necessary, a reserve to prefund any Old IPCo Notes principal and interest Provided pro rata to Extending IPCo Noteholders Project Monet Company Proposal Overview Company Proposal — Term Sheet As of immediately prior to the consummation of the transactions contemplated by this proposal (and, for the avoidance of doubt, includes accrued and unpaid interest). Professional eyes only figure, not subject to blowout. Term Loan exchange mechanics under review by counsel. Any holdouts to receive pledge of Chinos SPV common equity (subject to further legal diligence).

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Est. Amt. Outstanding (10/29/19)1 Proposed Treatment Intercompany Indebtedness $148mm Cancellation of intercompany loan due 2021 owed by J.Crew Group, Inc. to J.Crew Brand, LLC On the Closing Date, Chinos A will exchange the New Extended Notes to holders of Old IPCo Notes and contribute the Old IPCo Notes to J. Crew Group, Inc. as a capital contribution. J.Crew Group, Inc. will then deliver the Old IPCo Notes to J.Crew Brand, LLC, and in consideration therefor the intercompany loan due 2021 owed by J.Crew Group, Inc. to J. Crew Brand, LLC will be deemed paid in full (subject to further legal diligence) IP License Agreement NA Amended to provide royalty free use of the Licensed Marks (other than those payments necessary to service the Old IPCo Notes) Series A Preferred Stock $200mm Converted into New Chinos SPV Series C Preferred Stock Holders of at least 66% of the Series A Preferred Shares will cause the certificate of designation of the Series A Preferred Shares to be amended before the Closing Date, resulting in: An automatic, mandatory conversion of the Series A Preferred Shares concurrent with the consummation of the Madewell IPO into the right to receive the Liquidation Value This amendment will redefine “Liquidation Value” to be equal to the outstanding amount plus accrued interest as of the Closing Date, and will permit such value to be payable in New Chinos SPV Series C Preferred Stock at the on the Closing Date Series B Preferred Stock $129mm Converted into New Chinos SPV Series C Preferred Stock Sponsors will cause the certificate of designation of the Series B Preferred Shares to be amended before the Closing Date, resulting in: An automatic, mandatory conversion of the Series B Preferred Shares upon the consummation of the IPO into the right to receive the Liquidation Value This amendment will redefine “Liquidation Value” to be equal to the outstanding amount plus accrued interest as of the Closing Date, and will permit such value to be payable in New Chinos SPV Series C Preferred Stock on the Closing Date Common Equity 100% beneficial ownership of Chinos SPV $23 million of New Chinos SPV Series D Preferred Stock $351 million of Intercompany Preferred Stock issued by Chinos Intermediate, Inc. to Chinos Holdings, Inc.; after conversion of $329 million of aggregate Series A and Series B Preferred Stock, remaining $23 million distributed to common equity Management Incentive Plan Management for standalone J.Crew and Madewell will be entitled to participate in applicable management incentive plans on terms to be determined Company Proposal — Term Sheet (cont’d) Project Monet Company Proposal Overview As of immediately prior to the consummation of the transactions contemplated by this proposal (and, for the avoidance of doubt, includes accrued and unpaid interest).

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~$364 million of Madewell cash proceeds utilized to i) pay down the entirety of current ABL borrowings, and ii) pay all transaction related fees and expenses1 Based on Term Loan cash pay down of $1,096 million, the remaining $276 million of Term Loan claims (par plus accrued interest at the non-default rate) will be exchanged into New Chinos SPV Series A Placeholder reserve for tax leakage as a result of the separation of J.Crew and Madewell, subject to further diligence At the IPO valuation, $1,455 million of Madewell equity (60%) is contributed to the Chinos SPV1 Company Proposal — Sources & Uses at Closing ($ in millions) Project Monet Set forth below are the sources and uses and Madewell equity splits under the Company Proposal: Selected Commentary 1 2 Company Proposal Overview Note: Assumes balance sheet cash pre-separation funds post-separation balance sheet cash at J.Crew and Madewell. 1.For illustrative purposes only. Does not reflect an actual transaction or valuation. Illustrative Sources & Uses at Closing 1 3 2 3 4 4