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NexCen Brands, Inc (NEXC) Mulling Its Options

NexCen Brands (NEXC:NASDAQ) acquires and manages global brands, generating revenue through licensing and franchising. The company currently owns and licenses the Bill Blass and Waverly brands, as well as seven franchised brands: The Athlete’s Foot, Shoebox New York, Marble Slab Creamery, Great American Cookies, Pretzel Time, Pretzelmaker, and MaggieMoo’s.

NexCen has in recent months expressed doubts about its ability to continue as a going concern. This news has seen the stock fall from over $13 per share a year ago to less than a dollar per share recently. On May 30, 2008, the company announced some measures it was taking in an effort to stay afloat, including cutting about 25 per cent of its New York-based workforce in an effort to streamline operations. This should result in a savings of $3 million on an annualized basis.

The company also said that they are required to repay $30 million of the $70 million to finance the acquisition of Great American Cookies from Mrs. Fields by October 17, 2008. They confirmed that there are in ongoing discussions with a lender about possible amendments to this bank credit facility, as well as with other lenders regarding additional financing.

Perhaps most importantly, NexCen stated that they are exploring options to enhance liquidity. The company said that it has engaged N M Rothschild & Sons Ltd to explore strategic alternatives. The most likely outcome is that NexCen will have to sell at least some of their brands. On May 27th, it was reported in Women’s Wear Daily that the company was looking to sell its Bill Blass and Waverly units to help reduce its debt. The good news for NexCen was that the same article reported that the units were drawing interest from more than one possible suitor.

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