Steve & Barry's Stalks Its Buyer

The corporate stalking horse looking for a higher bidder to buy bankrupt college-clothing discounter Steve & Barry's LLC has found one: an enhanced version of itself.

BHY S&B Holdings LLC, a newly formed affiliate of investment firms Bay Harbour Management and York Capital Management, agreed to pay $168 million in an auction concluded early Thursday morning. Originally, Bay Harbour was the only party involved as the stalking horse, then called BH S&B, and the initial offering price was $163 million.

Under the terms of the latest deal, the majority of Steve & Barry's 276 stores will continue to operate. In addition to acquiring merchandise inventories and transfer rights to store leases, BHY S&B will acquire all Steve & Barry's intellectual property rights, including its celebrity and brand licenses and the company's key facilities, including its Port Washington, N.Y., headquarters; Columbus, Ohio, distribution center; and some overseas offices.

Among the other investors in BHY S&B Holdings are Steve & Barry's co-founders Steve Shore and Barry Prevor.

Earlier this month, Steve & Barry's, which filed for Chapter 11 protection on July 9, said the U.S. Bankruptcy Court had approved the stalking-horse proposal, expected to be the opening bid for an auction process. Bay Harbour Management is an investment advisor with experience purchasing distressed companies and turning them around. The firm's holdings have included the retailer Barneys New York, the facilities-based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino.

York Capital Management has more than $15 billion in assets under management, including hedge funds. It specializes in value oriented and event driven equity and credit investments.