Bluestar Alliance signed a letter of intent with specialty retailer Brookstone to acquire the brand assets of the company and to serve as a stalking horse bidder in Brookstone’s Chapter 11 restructuring. The Bankruptcy Court for the District of Delaware approved Bluestar’s position as stalking horse for the company’s auction scheduled for the end of the month.

Bluestar’s improved offer includes an option for Bluestar to select a transaction that would keep up to 50 existing Brookstone stores open, with a penalty of $400,000 payable if Bluestar either does not select this option or selects it and fails to keep at least 30 stores open.

“This agreement with Bluestar is an indication of the value of Brookstone’s cherished brand, and we are particularly encouraged by Bluestar’s enthusiasm to seriously consider a bid that includes operating Brookstone retail outlets,” said Brookstone CEO Piau Phang Foo. “We continue to see interest in our company from multiple potential buyers. During this time, we remain focused on serving our loyal customers, and we are grateful for the support of our dedicated employees.”

The new offer comprises $50.45 million in cash and at least $5.9 million of value in the form of readily salable inventory, for a total approximate value of $56.35 million. The signed letter of intent with Bluestar supersedes the previously-announced, $35 million proposal made by Authentic Brands Group and is subject to negotiation of an asset purchase agreement.

Brookstone had previously secured access to approximately $30 million in post-petition financing from Wells Fargo and Gordon Brothers Finance to support the sale and restructuring process.

Founded by Joseph Gabbay and Ralph Gindi in 2006. Bluestar Alliance owns, manages and markets a portfolio of consumer brands that span across many tiers of distribution from luxury to mass market. Its brands include Tahari, Bebe, Kensie, Catherine Malandrino, Nanette Lepore, Joan Vass, Michael Bastian, English Laundry and Limited Too.

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Wells Fargo, Gordon Bros Finance Provide $30MM Post-Petition Financing for Brookstone