Business Context and Reporting Period
This Form 6-K, dated June 20, 2018, reports the consummation of a business combination by Naked Brand Group Limited (formerly Bendon Group Holdings Limited). On June 19, 2018, the Registrant completed a reorganization with Bendon Limited and a merger with Naked Brand Group, Inc. ("Naked"). Following the transactions, the company changed its name to Naked Brand Group Limited and began trading on the Nasdaq Capital Market under the symbol "NAKD" on June 20, 2018.
Key Financial Metrics and Capital Structure
- PIPE Investment: The Registrant sold 4,534,137 ordinary shares in a private placement for an aggregate purchase price of $17,003,000. Investors also received five-year warrants to purchase an equal number of shares at an exercise price of $3.75 per share.
- Share Capital: Immediately post-transaction, there were 22,958,378 ordinary shares issued and outstanding. Former Bendon shareholders hold 71.24%, former Naked stockholders hold 9.01%, and PIPE investors hold 19.75%.
- Debt Restructuring: The Registrant repaid $13,000,000 of existing debt using PIPE proceeds, reducing outstanding debt from $27,000,000 to $14,000,000.
- Revolving Credit Facility: A new facility of NZ$20,000,000 (approximately $14,000,000 USD) was established with Bank of New Zealand, alongside an instrument facility of NZ$1,345,000 (approximately $941,500 USD).
- Equity Incentives: The 2017 Long-Term Incentive Plan was approved, reserving up to 4,000,000 shares for grants to officers, directors, and employees. No shares have been granted to date.
Material Changes Versus Prior Period
The filing details a fundamental change in corporate structure rather than operational performance metrics for a specific period. Key changes include:
- Corporate Identity: The entity formerly known as Bendon Group Holdings Limited is now Naked Brand Group Limited.
- Ownership Structure: The merger resulted in a new capitalization table where Bendon shareholders became the majority owners (71.24%) of the combined entity.
- Debt Load: Total debt was reduced by approximately 48% immediately following the closing of the transactions.
- Management: Justin Davis-Rice (formerly CEO of Bendon) became the Registrant's CEO, while Carole Hochman (formerly CEO of Naked) became Executive Chairman.
Outlook, Risks, and Contingencies
- Potential Acquisition: The Registrant is in advanced discussions to acquire FOH Online Corp. If completed, the Registrant would issue approximately 1,304,917 shares and assume approximately $9,500,000 of debt to secure a license for Frederick's of Hollywood products. This acquisition is described as "possible but not yet probable."
- Lock-Up Agreements: Carole Hochman is restricted from selling shares received in the merger for six months following the closing date.
- Credit Covenants: The new credit facility includes covenants restricting the creation of security interests, disposal of property, incurrence of new indebtedness, and fundamental changes such as mergers or liquidations.
- Events of Default: The credit agreement defines events of default including failure to pay, material breach of representations, bankruptcy, and change of control, which could trigger immediate repayment demands.
Investor Verification Checklist
- Verify the final share count and ownership percentages post-merger as disclosed in the filing.
- Confirm the terms of the $14,000,000 revolving credit facility and the specific covenants imposed by Bank of New Zealand.
- Monitor the status of the potential acquisition of FOH Online Corp., including the assumption of $9.5 million in debt.
- Review the definitive proxy statement/prospectus filed on April 27, 2018, for full details on the Merger Agreement and the 2017 Long-Term Incentive Plan.
- Check for the filing of the annual report on Form 20-F, which will contain the audited financial statements for the fiscal year ended January 31, 2018.