SOURCE: The Walking Company Holdings, Inc.

The Walking Company Holdings, Inc.

February 28, 2011 11:34 ET

The Walking Company Holdings, Inc. Announces Sale of BIG DOGS Trademarks and Other Corporate Events

SANTA BARBARA, CA--(Marketwire - February 28, 2011) - The Walking Company Holdings, Inc. -- www.thewalkingcompany.com, www.bigdogs.com -- today announced the following:

On February 22, the Company sold the trademarks and other intellectual property of its BIG DOGS(R) business (the "Big Dogs IP") for $5 million in cash, subject to a later working capital adjustment. The financial benefits to the Company from such additional capital include that it has allowed the Company to expand its rights under its credit line with Wells Fargo Bank and finance the redemption of its Preferred Stock that was issued last year to facilitate the Company's exit from bankruptcy. The Company simultaneously licensed back the Big Dogs IP to allow the Company to continue to operate its Big Dogs business online. 

In 2010, the Company had issued $10 million of Preferred Stock, the terms of which provided that if the Preferred is not redeemed by spring 2011, the Company could be required to conduct a rights offering of common stock that could result in severe dilution to common stockholders. To avoid that, over the last several months the Company has explored various options to fund the redemption of the Preferred through conventional finance sources. The sale and license-back of the Big Dogs IP was determined to be the most beneficial to the Company. Chairman Fred Kayne comments, "We had discussions with senior and subordinated debt lenders and other financing sources. But in the current market there was not a certainty of financing. After reviewing strategic alternatives available, the board determined that the sale of Big Dogs, combined with the expanded funding under the Wells line that it allowed, offered the best alternative to the Company."

Mr. Kayne further comments, "The sale is a win-win for the Company. It brings immediate cash to the Company (prior attempts to sell Big Dogs had all failed) and also allows the Company to participate in the future upside of Big Dogs over the term of the License. We were able to monetize an underutilized asset not central to our business. The sale has strengthened our credit position and allowed us to redeem the Preferred Stock that was issued to allow us to exit from bankruptcy last year, all to the benefit of the Company and its shareholders. This was the final piece in the puzzle to complete the financing restructuring that occupied much of the Company's attention over the last year and a half. The Company can now return its full focus to core operations and making money. I am happy with the progress of the Company." 

On February 22, the Big Dogs IP was sold for $5 million in cash to Big Dog Licensing LLC ("BDL"), a newly-formed company owned by the former holders of the Preferred Stock (Richard Kayne and KA-Sabes Investments, a company he controls) and Company CEO Andrew Feshbach. The Big Dogs IP was then licensed back to the Company pursuant to a License Agreement through December 31, 2013 (which can be extended another year), subject to certain early termination rights. Upon termination of the License Agreement, the Company is required to convey to BDL (without payment) $2.5 million in Big Dogs inventory (or in cash). 

In addition to being a former holder of the Preferred Stock, Richard Kayne is also a holder of approximately 10% of the outstanding common stock of the Company and is the brother of Fred Kayne, the Chairman of the Board and controlling stockholder of the Company. Fred Kayne has no interest in BDL. Due to the related-party nature of the transaction, the Company engaged an independent financial advisory firm to advise the directors, who advised that the sales was fair to the Company from a financial point of view.

ABOUT THE WALKING COMPANY HOLDINGS, INC.
The Walking Company Holdings, Inc. (the "Company") consists of its The Walking Company and Big Dogs subsidiaries. The Walking Company is a leading independent specialty retailer of high-quality, technically designed comfort footwear and accessories that features premium brands such as ECCO, Dansko, UGG Australia, MBT and Aetrex, among many others. These products have particular appeal to one of the largest and most rapidly growing demographics in the nation. The Walking Company operates over 210 stores in premium malls across the nation. Big Dogs develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular priced consumer products, including active wear, casual sportswear, accessories and gifts. All Big Dogs products bear one of the three distinctive registered trademarks: "Big Dogs", "Big Dog Sportswear", or the "logo dog". Big Dogs products are exclusively available online at www.bigdogs.com. The Company licenses the Big Dogs trademarks from Big Dog Licensing LLC.

With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. The actual future sales and other results of the Company could differ significantly from those statements.

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