FRESNO, Calif.–Gottschalks has entered into a sourcing and sales partnership with Everbright Development Overseas Ltd., a British Virgin Islands corporation, for which it will receive a $30 million investment.
Under the terms of the letter of intent, the investment will give Everbright $10 million of newly issued shares of Gottschalks’ common stock, to be issued by the company at a price of $1.80 per share, or approximately 29 percent of the company’s common stock, and a $20 million convertible secured note, which can be converted into common stock as well, for a fixed price of $1.80 a share. The letter of intent also includes warrants for Everbright to acquire additional shares of Gottschalks common stock.
In return, the retailer will work with Everbright on establishing a direct sourcing program with a network of Chinese manufacturers and on consignment arrangements for specific merchandise categories to be sold in its stores. Gottschalks will also have access to Everbright’s Luichi global sourcing business platform to help expand its capabilities for Internet sourcing, sales and revenue fees.
“The letter of intent with Everbright not only provides for a significant infusion of capital into our business but also creates opportunities for us to strengthen and improve our operations through new strategic initiatives,” said Jim Famalette, chairman and chief executive officer of Gottschalks. “As always, we remain committed to providing our customers an assortment of the best national brands of merchandise. Now, we are positioning the company to also expand upon our ability to differentiate our product assortment with an exciting new concept.”