Today we announced an important step in positioning Furniture Brands for the future. As you are well aware, the company has been facing many challenges, including having sufficient cash to operate successfully, grow our brands and best serve our customers. In light of this situation, management and the Board of Directors have reviewed a wide range of strategic options to strengthen our business. After careful consideration, we have decided to voluntarily file for Chapter 11 bankruptcy protection as a part of a broader restructuring plan. Importantly, this does NOT mean that we are going out of business – on the contrary, this is an important step in securing our future.
In conjunction with this step, we announced today that we have entered into an agreement with a strong new financial partner, affiliates of funds managed by Oaktree Capital Management L.P. (Oaktree), who have made a bid to acquire most of our businesses. This bid will serve as a starting point for us to run a sale process for our company, which may include other bidders. Oaktree is a leading institutional investor with deep experience working with companies in situations similar to ours.
We also announced today that we have received commitments of up to $140 million of new financing from Oaktree. If approved by the court, the new facility, known as “debtor-in- possession”, or “DIP” financing, will provide $50 million to enable us to continue to operate business as usual and continue to meet our financial obligations, which means we will continue to pay employee wages, salaries, medical and other benefits without interruption. Furthermore, your 401(k) plan funds, which are held in a trust, are fully protected under federal regulations.
We expect to emerge from the process as a stronger, more competitive company, better positioned to grow and prosper into the future. The capital infusion will allow us to invest in reinvigorating our brands and products, as well as pay our vendors and serve our customers.
This new ownership structure will create a new privately owned company, and we are very excited to have gained Oaktree as a strong, experienced partner. We strongly believe that this strategy is in the best interests of our employees, customers and suppliers. Importantly, management has already been in contact with our major vendors and customers who pledged that they will support Furniture Brands through this reorganization. We are sensitive to the anxiety that you have been going through over the last several months and may experience during this process. However, the best thing all of us can do is to continue to stay focused on delivering for our customers and demonstrate to our customers that their satisfaction continues to be our #1 priority. We have enclosed a “Questions & Answers” document which may address some of these questions. If you have additional questions, please do not hesitate to contact your supervisor. We pledge to maintain a dialogue with you throughout the process and update you as appropriate on our progress.
As always, I want to let you know how much we appreciate your hard work, dedication and loyalty. Let’s all work together with renewed energy and commitment so that we can emerge from our reorganization as quickly as possible as a stronger and healthier company.