THE FACT THAT? Pat McGrath has agreed to relinquish majority control of Pat McGrath Labs as part of a restructuring deal designed to bring the cosmetics company out of bankruptcy.
THE DETAILS Under the deal, investment firm GDA Luma Capital Management will receive a 65% common equity stake in the brand, along with new preferred equity in exchange for forgiving debt previously lent to the company. The deal comes after Pat McGrath Labs filed for bankruptcy protection earlier this year after allegedly defaulting on a bridge loan of more than $43 million.
GDA Luma has also provided a $10 million Chapter 11 loan to support operations during the bankruptcy process and may provide up to $20 million to help fund the company’s exit from bankruptcy. McGrath will remain involved as creative director and retain a minority stake, while additional capital will be allocated through a management incentive plan.
THE WHY? The restructuring aims to recapitalize the business, resolve debt obligations and stabilize operations, allowing the brand to continue producing and distributing its cosmetics globally.
Fountain: Bloomberg
