Gymboree to Sell Play & Music Unit to Zeavion for $127.5 Million

  • Proceeds of deal will be used to reinvest in core business
  • Bain Capital bought kids’ retailer for $1.8 billion in 2010

Gymboree Corp., the children’s retailer, has agreed to sell its play-center business to a Singapore-based investment group.

Zeavion Holding, a closely held group that invests in education and entertainment businesses, will pay $127.5 million for Gymboree’s Play & Music unit, the company said in a statement. The apparel and clothing unit, which makes up the majority of the business, is not part of the deal.

Gymboree was taken private by Bain Capital in 2010, in a deal valued at about $1.8 billion. The company’s 9.125 percent notes are trading near 54 cents on the dollar, the highest level in at least a year, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Its $769 million of secured first-lien loans are trading at close to 75 cents on the dollar, according to prices compiled by Bloomberg.

“If you look at the last nine months we’ve worked hard to aggressively improve the capital structure and profitability of the business,” Mark Breitbard, chief executive officer of Gymboree, said in a phone interview. “We have completed the sale and leaseback of a distribution center, improved Ebitda over the past two quarters and bought back debt.”

The proceeds of the sale will be used to continue to improve Gymboree’s capital structure, as well as to invest in its online offering, store network and supply chain, Breitbard said. The company, which has more than 1,000 stores globally, is keen to retain “flexibility” in what remains a challenging retail market, he said.

Gymboree Play & Music, founded in 1976, offers a range of class activities for children from newborn to 5 years old, including birthday parties, monitored by trained staff. The unit has more than 700 franchised and company-operated centers across 42 countries, according to the statement.