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Madden Takes Control of Betsey Johnson Brand
Steve Madden, who has upped his investment in Betsey Johnson LLC from covering her credit debt to buying her trademarks, has no plans to make major changes.
On the march to do more deals along these lines, Madden said he is not about to curb Johnson. Last month Steven Madden Ltd. took over a $48.8 million loan to Johnson's firm and has since absolved the loan in exchange for ownership of the brand's intellectual property, including the moderate collection Betseyville. Madden now has licensing deals with the designer's company, Betsey Johnson LLC, for it to produce the clothing and operate her boutiques and get royalties from Johnson's firm and its other licensees.
According to sources, Madden pumped in $3 million for five years to help with her firm's operating needs. Steve Madden Ltd. gets a 10 percent equity in that operating company in exchange. Castanea Partners' stake in Johnson's firm, acquired in 2007, will be diluted a bit but it still will be the biggest shareholder. A Form 8-K detailing the changes is expected to be filed with the Securities and Exchange Commission this morning.
Beyond the initial investment, Madden said the strategy is to ramp up marketing and fortify the daytime dress and shoe businesses. The store count and Johnson's management will pretty much remain intact. Diffusion lines are not planned, but the help wanted shingle is out for nondesign positions since Johnson will continue to handle all design.
Declining to pinpoint Johnson's stake in the company, Madden said, Betsey is my partner. She has nothing to worry about and I will protect her.& She is not on the hook for anything. I am honored to be partners with her. That's the truth.
Madden is no stranger to Johnson's company. In 2006, his company bought Daniel M. Friedman & Associates, which held the designer's accessories license, for $28 million. His firm will soon start producing Johnson's footwear once the current license with Titan Industries expires at the end of this year. But nothing is a sure thing. There is no such thing as a low-risk investment, Madden said Wednesday during an interview in his showroom.
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