Furniture Brands Announces Court Approval for Enhanced "Stalking Horse" Bid for Company's Assets
October 03 2013 - 11:53AM
Preliminary Agreement Reached for KPS
Capital Partners to Acquire Assets Including Lane
Business for $280 Million
Includes Enhanced Terms on DIP
Financing
Extends Offers of Employment to
Substantially All Current Employees
Furniture Brands International ("Furniture Brands" or "the
Company") today announced that it has entered into an asset
purchase agreement with KPS Capital Partners L.P. ("KPS") to
acquire substantially all of the Company's assets for $280 million,
including the Company's Lane business.
In addition, Furniture Brands has filed a motion seeking
authorization from the U.S. Bankruptcy Court for the District of
Delaware the Honorable Judge Christopher S. Sontchi presiding, to
conduct an auction process for the Company. Under Section 363 of
the U.S. Bankruptcy Code, KPS would serve as the "stalking horse"
bidder in the proposed auction, establishing a minimum value of the
Company's assets.
The Court entered an interim order under which KPS will replace
Oaktree Capital Management L.P. as the DIP lender to ensure its
operations will continue uninterrupted and to set a final hearing
for October 11, 2013. KPS has committed to fund up to approximately
$190 million as the DIP lender.
In order to maximize the asset price of the Company's brands,
the acquisition agreement would allow for additional qualified
prospective bidders to enter an auction process with KPS, in
accordance with procedures established by the Court. The Court
authorized the Company to proceed with an auction of the Company's
assets on or before December 10, 2013, subject to the approved
bidding procedures, and set December 5, 2013 as the deadline for
any bids.
Ralph Scozzafava, Chairman of the Board and CEO of Furniture
Brands commented: "The KPS bid for our business establishes a solid
foundation as we move toward a successful emergence from Chapter
11. The KPS bid also enhances our creditors' return with a
higher total price as well as enhanced DIP financing terms. We
are also pleased that KPS has extended an offer of employment to
substantially all of our current employees."
Scozzafava concluded: "The continued interest in the Company and
brands demonstrates their significant value. We will continue to
work diligently through this reorganization process to serve the
best interest of our stakeholders including our customers, dealers,
employees and partners. We believe this enhanced bid illustrates
the long term merits of our future as a healthy, standalone
business and our ability to emerge from this process as a strong
standalone business going forward."
Based on the current stalking horse bid, shareholders will not
receive any distribution or recovery on account of their common
stock.
Furniture Brands and certain of its affiliates commenced cases
to reorganize under chapter 11 of the U.S. Bankruptcy Code on
September 9, 2013. The chapter 11 cases are being jointly
administered under case number 13-12329. Additional
information about the restructuring is available at the Company's
website www.furniturebrands.com. For access to Court documents and
other general information about the Chapter 11 cases, please visit:
http://dm.epiq11.com/FBN
About Furniture Brands
Furniture Brands International (OTC:FBNIQ) is a world leader in
designing, manufacturing, sourcing and retailing home
furnishings. Furniture Brands markets products through a wide
range of channels, including company owned Thomasville retail
stores and through interior designers, multi-line/independent
retailers and mass merchant stores. Furniture Brands serves its
customers through some of the best known and most respected brands
in the furniture industry, including Thomasville, Broyhill, Lane,
Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture,
Maitland-Smith and LaBarge. To learn more about the company, visit
www.furniturebrands.com
Cautionary Statement Regarding Forward-Looking
Statements
Matters discussed in this document and in our public
disclosures, whether written or oral, relating to future events or
our future performance, including any discussion, express or
implied, of our anticipated growth, operating results, future
earnings per share, or plans and objectives, contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These statements are often identified by the words
"will," "believe," "positioned, " "estimate," "project," "target,"
"continue," "intend," "expect," "future," "anticipates," and
similar expressions that are not statements of historical fact.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are
difficult to predict. Our actual results and timing of certain
events could differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including, but not limited to, those set forth under "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 29,
2012, and in our other subsequent public filings with the
Securities and Exchange Commission. Such factors include, but are
not limited to: failure to identify and successfully implement
strategic initiatives; changes in economic conditions; loss of
market share due to competition; changes in our pension funding
obligations; failure to forecast demand or anticipate or respond to
changes in consumer tastes and fashion trends; failure to achieve
projected mix of product sales; business failures of large
customers; distribution realignments; inventory write-downs; sales
distribution and manufacturing realignments; continued operating
losses; loss of or reduction in trade credit; ability to service or
refinance our debt; restrictions in our credit facilities;
increased reliance on offshore sourcing of various products;
fluctuations in the cost, availability and quality of raw
materials; product liability uncertainty; environmental
regulations; future acquisitions or dispositions; possible
delisting of our common stock; loss of key personnel; impairment of
intangible assets; anti-takeover provisions which could result in a
decreased valuation of our common stock; our inability to secure
additional financing to meet our operating and capital needs; our
ability to open and operate new retail stores successfully;
disruptions of our IT systems; failure to maintain and upgrade our
IT systems; and fluctuations in our common stock. It is routine for
internal projections and expectations to change as the year or each
quarter in the year progresses, and therefore it should be clearly
understood that all forward-looking statements and the internal
projections and beliefs upon which we base our expectations
included in this report or other periodic reports are made only as
of the date made and may change. While we may elect to update
forward-looking statements at some point in the future, we do not
undertake any obligation to update any forward-looking statements
whether as a result of new information, future events or
otherwise.
CONTACT: Investor contacts:
Rick Isaak
VP, Controller, Treasurer and Investor Relations
Furniture Brands
314-862-7117
OR
Anton Nicholas/Phil Denning, ICR, 203-682-8200