In case you missed this story from today’s Daily Journal:
A U.S. Bankruptcy Court tapped KPS Capital Partners as the stalking horse bidder for Furniture Brands International, which filed for Chapter 11 last month. KPS’ $280 million bid is $20 million higher than the one offered by Oaktree Capital Management, which had initially been favored by Furniture Brands to be its stalking horse bidder.
A stalking horse bid sets a minimum on an auction for a company’s assets, and allows other potential suitors to make offers.
According to Furniture Today, bids are due by Dec. 5, and a court-supervised auction is scheduled Dec. 10, if necessary. A hearing to confirm the sale is Dec. 12.
Also, the St. Louis Disptach, citing Bloomberg, reported that KPS’s bid has “better terms, a higher amount and lower breakup fee,” Luc A. Despins, a lawyer for Furniture Brands, told the judge. “The law is clear and our hands are tied and we need to accept the higher and better offer.”
A lawyer for unsecured creditors said that KPS intends to operate the entire business and nearly all of its current employees will be offered jobs, Bloomberg reported.
That’s good news for the 1,400 Lane Furniture employees in Northeast Mississippi, who are wondering what their future is as its parent company, Furniture Brands, wrestles with bankruptcy.
And Furniture Brands said the following earlier this morning, with CEO Ralph Scozzofava calling the bid a ‘solid foundation’:
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.
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