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LVMH takes 5.4 per cent passive stake in G-III Apparel Group

After selling off DKNY to G-III Apparel Group earlier this year, LVMH Moët Hennessy Louis Vuitton claims it has 5.4 per cent passive stake in the group. A passive stake is a form of investing where the shareholder in this case (LVMH) takes no active part in running the company.

According to December 12 Securities and Exchange Commission filing, which reflects the December 1 acquisition, LVMH does have a shared voting power. G-III Apparel Group, which also owns licenses for Calvin Klein, Ivanka Trump among other brands sold $75 million in common stock to the luxury conglomerate chaired by Bernard Arnault in connection with the DKNY deal.

In July, LVMH agreed to sell Donna Karan International to G-III Apparel Group for of $650 million, a rare disposal for the French luxury-goods maker. But this move failed to turn around a label that once defined workplace attire for successful U.S. women. G-III funded the total purchase price for DKNY, subject to certain adjustments with a combination of cash, $75 million of newly issued shares of its common stock to LVMH and a $125 million junior lien seller note of which $75 million in principal amount has a six and a half year maturity and $50 million in principal amount has a seven year maturity. The cash portion of the purchase price was paid from the proceeds of a $350 million six-year senior secured term loan, and the balance from borrowings under a $650 million five-year senior secured asset based revolving credit facility and cash on hand.