Toms CEO Jim Alling – SES file photo
Editor’s note: We have added a letter that CEO Jim Alling sent to employees about the ownership change.
Toms, which has been urgently working to turn around with a looming $300 million debt payment due in 2020, has new owners under a debt restructuring deal, according to Reuters.
Founder Blake Mycoskie and private equity firm Bain Capital, which had acquired 50% of Toms in 2014, are giving up ownership to Jeffries Financial Group, Nexus Capital Management and Brookfield Asset Management.
The new owners have committed to investing $35 million in growth areas at Toms as part of the arrangement, in addition to restructuring Toms’ debt.
As recently as 2017, Mycoskie and Bain needed to put more money into the business when the company faced a cash crunch.
In an in-depth interview with SES in 2018, current CEO Jim Alling said that how Toms performed in the spring and summer of 2019 would be crucial to the company being able to refinance its debt. He also discussed all the changes and challenges the company has faced.
Toms has tweaked and improved several parts of its business the past several years, including narrowing its SKU count, exiting non-core categories, and remaking its giving model to include social issues such as ending gun violence.
When we last spoke, Alling indicated there were positive signs in the business. However, it might not have been enough to outrun that looming, large debt payment.
Moody’s has estimated that Toms’ current annual revenue is in the $300 million range.
When Bain acquired 50% of the company, Toms was valued at approximately $625 million including debt, according to reports at the time.
We have a message into Alling to try to find out more about what this means for Toms and the management team there.
Letter CEO Jim Alling sent to employees
“Hi everyone,
“I am writing to share good news about the future of TOMS. As discussed in our recent All Staff meetings, we have been working with Bain Capital Private Equity and Blake Mycoskie to identify the best path forward for our company.
“We have signed an agreement that transfers the ownership of TOMS to a group of investors led by Jefferies, Nexus, and Brookfield. These organizations have all expressed a commitment to our company, our brand, and our mission. To show that commitment and support our future growth, the new owners are investing $35 million into our company. Combined with an enhanced capital structure, this funding will enable TOMS to further invest in our promising growth areas and continue our commitment to giving, which have been initiated and supported by Bain Capital and Blake over the past five years.
“I recognize you may have questions about this announcement and what it means for you. We have scheduled an All Staff meeting on January 7th where we will share more details related to this announcement and answer any questions you might have.
“If you have questions that you would like to submit for the discussion at our All Staff meeting or if you receive any external inquiries, please send them to questions@TOMS.com. In the meantime, if you have immediate questions, please contact your department head or me directly.
“Thank you for your continued dedication and support of one another and the TOMS mission throughout this year and in the years to come. This transfer of ownership strongly positions TOMS to fulfill its mission of using business to improve lives.
“Jim Alling”
