Sequential Brands Acquires Ellen Tracy, Caribbean Joe Brands for $62.3M

Sequential Brands Group, Inc.

("Sequential" or the "Company") today announced that it acquired the intellectual property management company that owns two consumer lifestyle brands, Ellen Tracy and Caribbean Joe. The purchase price of the transaction was comprised of $62.3 million in cash and approximately 2.8 million shares of common stock of Sequential. Yehuda Shmidman, CEO of Sequential, commented, "Today's acquisition represents the completion of Sequential's base platform, as we acquired two strong brands and a proven activation team led by Rick Platt, who joins Sequential as Group President, Brand Management." Mr. Shmidman continued, "With the addition of both Ellen Tracy and Caribbean Joe, Sequential's portfolio now includes six brands that have more than 50 licensees and an expected run-rate of close to $1 billion in retail sales worldwide. With our brand management platform in place, our plan is to focus on growing each brand in our portfolio, while aggressively pursuing new brands as well." Ellen Tracy was founded in 1949, and over the years, the brand grew into a leading fashion brand distributed in premium department and specialty stores. The evolution of the brand continued in 2010, when, Macy's became the exclusive sportswear retailer for Ellen Tracy and the brand began launching internationally, most recently in Karstadt Germany. In addition to its successful apparel collections, Ellen Tracy expanded to include collections for footwear, outerwear, legwear, hosiery, belts, eyewear, fragrance, handbags, jewelry and home. Caribbean Joe is an island inspired lifestyle brand distributed in more than 10,000 retail locations with product categories that range from men's and women's apparel to swimwear and accessories. Both Ellen Tracy and Caribbean Joe are currently licensed to leading licensees including Li & Fung, Komar, The Moret Group, Bernette Textile and G-III Apparel Group. The Company estimates that these two brands together will generate between $12 and $14 million in royalty revenues in the next 12 months. On a combined basis with the Company's existing brand portfolio, the Company is projecting forward 12-month royalty revenues of $23-25 million from its six brands, operating at 50% EBITDA margin. The Company's EBITDA margin is expected to expand as the Company leverages the platform to acquire additional brands. After giving effect to the consummation of the acquisition, the related financing transactions and payment of related transaction costs and expenses, the Company will have approximately $15 million of cash on its balance sheet. In addition, the Company's six brands have approximately $80 million in aggregate minimum royalty revenue contractually guaranteed to the Company. The Company's financing efforts were led by Bank of America who provided a $45 million loan to the Company and a separate group who provided an additional $20 million loan to the Company.