Greetings, and welcome to the Xcel Brands business update. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Berger, Investor Relations. Thank you, Andrew. You may begin.
Good evening, everyone, and thank you for joining us. We appreciate your participation and interest and hope that all of you are safe and well. With us on the call today are Chairman and Chief Executive Officer, Robert D'Loren, Chief Financial Officer, Jim Haran, and Executive Vice President of Business Development and Treasury, Seth Burroughs. Today, the company announced that it closed on the sale of a 70% interest in its Isaac Mizrahi brand. The company will file a Form 8-K report relating to this transaction this week, and it will be available on the company's website at www.xcelbrands.com. This call is being webcast, and a replay will be available on the company's investor relations website. Before we begin, please keep in mind that this call will contain forward-looking statements.
All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company's most recent annual report filed with the SEC. Xcel does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The dynamic nature of the current macroeconomic and geopolitical environment means what is said on today's call could change materially at any time. With this, I am pleased to introduce Robert D'Loren, Chairman and Chief Executive Officer. Bob, please go ahead.
Thank you, Andrew. Good evening, everyone, and thank you for joining us. On today's call, I will review the transformation of our business through the sale of the 70% interest in the Isaac Mizrahi brand and a venture agreement with WHP Global, our operating role going forward, and our plans to use the proceeds from the sale. Our CFO, Jim Haran, will discuss financial details of the transaction. I'm pleased to share with you that we successfully completed the sale of the 70% interest in our Isaac Mizrahi brand and entered into a newly formed business venture agreement with WHP Global, a private equity-backed brand management and licensing company.
The transaction resulted in $46.2 million of cash proceeds at closing, which combined with our 30% retained interest in the venture and a $2 million earn-out, places a valuation on the Isaac Mizrahi brand at $68 million, which is significantly higher than when we acquired the brand in 2011. By retaining ownership in the brand, we remain committed to participating in the future growth of this iconic brand. Under our agreement with WHP Global, we will continue to oversee and manage the Isaac Mizrahi business on QVC, and we have entered into a license agreement with the venture to continue to develop a women's apparel business under the Isaac Mizrahi brand in the United States and Canada. We are excited to partner with WHP Global as we move toward new prospects for the Isaac Mizrahi brand, particularly international opportunities, given WHP Global's global footprint.
We believe that this transaction is beneficial for Xcel in that it allows us to realize substantial value from the growth created by us in the Isaac Mizrahi brand while retaining a material interest in its future growth. As I stated on our Q1 earnings call earlier this week, we have worked hard over the past 12 years to position Xcel as a design, production and live stream media platform focused on driving growth in consumer brands. We have also developed an innovative proprietary live streaming platform based upon reimagining shopping, entertainment and social media as one thing, and have become an industry leader in this rapidly emerging marketplace. We are pleased both with the success we have been able to achieve under our brands on direct response television, as well as our ability to materially increase the long-term value of our brands as evidenced by this transaction.
The transaction significantly enhances our balance sheet. Concurrent with this transaction, we repaid 100% of our outstanding term debt under our term loan agreement with First Eagle and increased balance sheet cash by $14 million and now have $22 million of working capital. For the first time since we started the company in 2011, we are now a debt-free company, which provides us with significant flexibility to pursue opportunities that accelerate growth. While the Isaac Mizrahi transaction will impact our revenues and earnings for the remainder of 2022, we expect that even taking this transaction into account, we will be profitable for the year. Having strong liquidity levels and greater access to capital is critically important in today's business environment.
We expect to enhance our capital levels in the coming quarters with a new commercial bank working capital line and have maintained our relationship with First Eagle for future acquisition financing. We will move quickly but prudently to put this capital to work and are exploring several strategic investments that we believe will continue to enhance our competitive position while retaining a strong balance sheet. We are also working on multiple new projects within our existing businesses and believe that we will be able to quickly replace the earnings from the Isaac Mizrahi brand based upon the pipeline of projects and opportunities that are currently either planned or being considered. We're very pleased with the transaction as a step towards strengthening our balance sheet and positioning Xcel as a leading platform for consumer brands, primarily driven by the rapidly growing live stream shopping marketplace.
In closing, we believe our financial flexibility, strong liquidity, rich asset value, and access to capital will drive our current businesses and fund new opportunities. This is even more important as companies in our industry are dealing with margin pressure due to logistics and raw materials costs. As a result, we believe that the growth investments we are pursuing, combined with our strong balance sheet, will position us well to grow our business despite any economic headwinds that may lurk ahead. As of today's call, our wholly owned brands include Halston, Lori Goldstein, Judith Ripka, and C. Wonder, and we share ownership in Longaberger and now Isaac Mizrahi. I have stated in the past that I believe that our asset values far exceed our stock price and market cap. The Isaac Mizrahi transaction supports that hypothesis.
We will continue to build our existing brands and/or develop or acquire new brands to create continued growth with the goal of enhancing shareholder value for our stakeholders. Now, I'd like to turn the call over to Jim to discuss the Isaac Mizrahi transaction in more detail.
Thanks, Bob, and good evening, everyone. I will discuss the Isaac Mizrahi transaction and provide some additional insight into our business on a pro forma basis. The company received over $14 million of cash after paying down our deal and debt costs and increased working capital by approximately $16.7 million. The company is now debt-free, saving $4.5 million of annual debt service. The retained interest in the venture will be accounted for under the equity method of accounting. The wholesale activity under the Isaac Mizrahi license will be reported by the company in the ordinary course of business, separate from the retained interest accounting. The company will be filing an 8-K over the next few days, which will provide details of the transaction and will include unaudited pro forma financial statements based on the historical financial statements of the company after giving effect to the sale.
These will include an unaudited pro forma balance sheet as of March 31st, 2022, an unaudited pro forma statement of operations for the three months ended March 31st, 2022, and the year ended December 31st, 2021. These unaudited pro forma financial statements should not be taken as representative of the future results of operations or financial position of the company. With that, I would like to turn the call back over to Bob.
Thank you, Jim. This concludes our prepared remarks. Operator?
Thank you. We will now be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Howard Brous with Wellington Shields. Please proceed with your question.
Thank you. Robert, first, congratulations on the sale. As part of the first question, why didn't they buy the rest of it, the remaining 30%, and have you manage it?
Howard, we believe that there's still significant upside with the Isaac Mizrahi brand, both in interactive television and in bricks and mortar distribution. One of the limiting factors we had is we needed capital to grow the Isaac Mizrahi brand in bricks and mortar, and this transaction gives us the ability to do that. We would've been interested in retaining more. There was a negotiation on both sides wanting more and less in certain cases, and I think we landed in the right place to have a significant stake going forward and getting the liquidity that we wanted for the company.
Given the liquidity, can we go over each of the brands, C. Wonder, et cetera? What you paid for them? As I look at the assets and just extrapolating some of the numbers, I'd like to be able to find out what you paid for the brands in terms of some numbers, what the revenues are per brand. Any thoughts in terms of 2022 revenue per brand? Just general information, like, we can get a better sense of where we are now.
Sure. Just, you know, in terms of cost for the assets, Lori Goldstein, C. Wonder, Halston, Judith Ripka, Longaberger, and now putting a $22 million valuation on the 30% interest that we are retaining in Isaac Mizrahi, the IP value, cost number on the balance sheet is $112 million. I don't have the breakouts, Howard, on revenue by brand, nor do we really report that. On cost, which is numbers that we have, we have reported, it's about $112 million.
You're talking about over $5 a share.
That is correct. At cost, yes.
At cost.
Of course, yes. As you know, value is a number that you set in time or market value. Certainly, we had significant appreciation in the Isaac Mizrahi brand. The goal here is to continue to build the brands that we have in the portfolio, including Isaac Mizrahi, to create more value.
Of the cash that you've received, plus cash in the till, how much will that be to use, excuse my voice, to improve the existing five brands, including Longaberger?
We have combined $17 million of cash on the balance sheet as of today, and positive working capital of $5 million, which is unlevered. It's all current goods, current inventory, current receivables, net of AP. We will be working on a commercial bank working capital facility to fund a lot of the growth in the brands that we have, including programs that we plan to announce soon for Halston, C. Wonder, and others. That's what we're going to use the cash proceeds and our working capital for.
For acquisitions, you still have the $50 million line?
We have maintained the relationship with First Eagle. There are other sources of capital that are also available to us that we are having discussions with various lenders and investors. We don't foresee any funding issues for acquisitions should an acquisition opportunity present itself.
It's in Women's Wear Daily. They talked about they're looking for further brand acquisitions. Why didn't they acquire all of XELB?
The entire company was not for sale. Frankly, the Isaac Mizrahi transaction was an unsolicited offer. It was just something that came about through a casual conversation. You would certainly think while we are just getting started with them, and I can't speak for them, we do have capabilities, technology, and brands that they may find that they need in the future. For now, we are just getting started with them, and we're taking it one step at a time.
All right. Thank you. I'll step off and back into the queue. Thank you.
Thank you, Howard.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Now our next question is from Jim Dowling with Jefferies Capital Partners. Please proceed with your question.
Hi, Bob. Congrats on the transaction. Following up on Howard's question, can you give us a sense for since you sold an asset, what kind of gain there is, and I presume there won't be any taxes because of your NOL. What is your rough estimate of book value per share pro forma?
We are running through those calculations now. Jim, we think book value will come in somewhere around $84 million-$85 million.
Net book value.
Net book value. You know, we'll have that number finalized over the next few days, obviously before we file the 8-K. That's where we think it will be for the Isaac Mizrahi asset.
Secondly, without knowing exactly what the number is, qualitatively, it would appear that Isaac Mizrahi was a significant contributor to EBITDA, pre-tax earnings. We understand the arithmetic on just the savings by repaying debt on interest costs, but you did make the comment that you feel confident that you'll be in the black this year, even after taking into account the absence of the contribution from Isaac Mizrahi. Can you put any more color on that?
I can tell you that top line revenue from Isaac Mizrahi was about $14.5 million in royalties, with $9.3 million operating contribution. We do think that we will be EBITDA positive this year without the transaction. We have five initiatives that we are working on, and some are extensions of what we are doing currently with our brands, and others are new transactions or brands that we're going to announce. We think over a very short period of time, we will replace this operating contribution that we had from Isaac Mizrahi.
Thank you.
Thank you, Jim.
Thank you. Our next question is from P.J. Solit with Potomac Capital. Please proceed with your question.
Hi. Actually, my questions have been answered, so I'll just say congratulations. Nice transaction.
Thank you.
Thank you.
Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for any closing comments.
Okay, if there are no further questions, ladies and gentlemen, thank you for your time this evening. We greatly appreciate your continued interest and support in Xcel. As always, stay fit, eat well, and be healthy.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.