Aeropostale Said to Consider Investment From Private Equity

Aeropostale Inc. (ARO), the teen apparel retailer under pressure from an activist investor to sell itself, is working with Barclays Plc (BARC) to explore options such as the sale of a convertible note or preferred stock to a private-equity firm, people with knowledge of the matter said.

Aeropostale is also weighing a straight-up sale, said the people, who asked not to be identified because the talks are private. The New York-based retailer contacted at least two buyout firms as of last month as management weighs alternatives, people familiar with the situation said then.

Crescendo Partners has been pressing Aeropostale’s management, sending a letter in November demanding that the New York-based retailer find a buyer. Chief Executive Officer Tom Johnson is trying to turn around the company, which has lost money for four straight quarters, with updated fashions and plans to close as many as 40 underperforming stores this year.

A representative for Barclays declined to comment. Susan Lewis, a spokeswoman for Aeropostale, didn’t respond to requests for comment.

An investment from a buyout firm, known as a private investment in public equity, carries lower risks for the investor by giving the buyer a higher class of stock than regular equity. In December, Crocs said Blackstone Group LP agreed to buy $200 million in preferred stock in the shoemaker.

Crescendo, which didn’t disclose the size of the stake it owns in Aeropostale in its November letter, said that together with its affiliates it is a “significant stockholder.”

Aeropostale rose as much as 9.5 percent in late trading, after climbing 1.9 percent to $6.94 at the close in New York, for a market value of about $545 million. The shares have plunged 45 percent in the past year.

Reuters previously reported that Aeropostale is working with Barclays and may raise capital from private-equity firms.

To contact the reporter on this story: Jodi Xu in New York at jxu205@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

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