The holding company NexCen Brands kicked off a major retail franchise buying spree when it acquired Athlete's Foot last November. After landing a $150 million revolving credit warehouse facility to help finance the purchase, NexCen brands and Baker & MacKenzie, its attorney, may have also developed a valuable tool to track requirements for identifying ownership of the trademarks pledged as collateral for the financing.
Under the terms of the facility, the initial draw will give NexCen $26.5 million to leverage its acquisition of Athlete's Foot. The credit facility will primarily provide additional capital to NexCen Brands so it can make more intellectual-property-related purchases. BTMU Capital Corp., a subsidiary of Mitsubishi UFJ Financial Group, arranged the credit facility. NexCen can use the warehouse facility to purchase other retail brands, and it can refinance the warehouse from time to time through securitization, according to Richard Rudder, a partner at the New York City-based Baker & MacKenzie. Company officials, however, could not confirm definite plans for any securitization deals at press time.
For the time being, NexCen Brands is working through the painstaking process of perfecting liens on the trademarks for Athlete's Foot, which involves ensuring that a lien holder is correctly identified on an asset's title, in this case, on the Athlete's Foot trademarks, Rudder said.
The athletic shoe retailer operates in as many as 40 countries. Baker & MacKenzie has participated in a number of transactions for other clients such as Guess? and BCBG that involved issuing recording liens in other countries. However, Athlete's Foot has a much broader distribution and licensing base, and this is why NexCen and Baker & MacKenzie are finding out that the documentation and fee requirements can vary widely from one local authority to another. Some areas, such as Indonesia and Kuwait, have no defined methods of perfecting liens.
"It is expected that, as we gather more information regarding the perfection process in different jurisdictions, the time and cost to do this work in future transactions will be significantly reduced," Rudder said.
So far, the area of cross-border lien perfection is one where few IP securitization issuers have a lot of experience. The database, however, will help NexCen navigate the cross-border lien perfecting process on future transactions, Rudder said.
"We [are learning] what can be done and what cannot be done," he said.
(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.