Handy acquisition talks continue
Houston-based Handy Hardware Wholesale issued a warehouse and office update to co-op members yesterday, pointing to improved fill rates and continuing talks on a possible acquisition, among other things.
Handy filed for bankruptcy protection in January.
The April 11 letter from the board of directors highlighted four items: truck fleet consolidation that is expected to boost efficiency, consolidation of Houston warehouse functions into a single day shift, the elimination of the director of sales position held by Lynn Bradley as reported here earlier, and the existence of ongoing talks with parties interested in acquiring Handy.
“As required by the bankruptcy process, due diligence and discussions are continuing with the two interested parties that have expressed an interest in acquiring Handy. Both parties have clearly expressed their desire to continue the legacy of Handy if they were to acquire the business,” according to the letter. “More detailed information will be presented to our members as it becomes available.”
The company added that service levels (fill rates) for March 2013 averaged 88% and are approaching the 90% level this week, with yesterday’s service level at 89%.
The truck fleet consolidation will elevate Averitt Express as the single carrier partner. The co-op expects to realize annual savings of more than $1.5 million as a result of the bankruptcy court-approved termination of a third-party trucking contract.
Regarding the elimination of the director position, the co-op thanked Lynn Bradley for six years of service. Ken Harvey will remain as VP sales for Handy.
Handy Hardware eliminates executive position
Lynn Bradley, senior director, retail development, is out at Handy Hardware Wholesale, a cost-cutting move according to the Houston-based co-op.
Handy Hardware Wholesale, which filed for bankruptcy protection in January, eliminated the position of “senior director, retail development,” as part of a cost-reduction plan, according to Morrie Aaron, president of MCA Financial Group. MCA is Handy’s financial advisory firm that specializes in restructuring.
It was Bradley who signed an initial letter to members announcing the co-op’s bankruptcy filing. In the letter, he asked for patience and support from members. He also wrote: “There are no plans to liquidate or shut down, and we don’t even see that as option.”
Aaron added the co-op still intends to wrap up its bankruptcy situation by late June, with the end result being either the co-op remains an independent firm or emerges from bankruptcy through an acquisition.
Until August 2010, Bradley had been chief financial officer and senior VP sales for Handy, but he resigned from those posts after the co-op became aware of a past SEC action involving Bradley. A settlement ended with Bradley neither admitting nor denying charges, and included an agreement for him not to serve as an officer or director of a publicly traded company.
At the time, Handy said: Bradley’s performance while at Handy was “highly beneficial to the company and to our members.”
Handy Hardware approached by possible buyers
Houston-based Handy Hardware Wholesale has received acquisition overtures, according to a memo to dealers from the co-op’s board of directors.
No formal offers have been made, and none was solicited, the board said in the March 28 letter obtained by HCN. Handy did not immediately respond to an HCN request to reveal the identity of the two companies that made overtures.
Handy filed for bankruptcy protection in January and submitted a plan for reorganization in March.
While the board says it is focused on the goal of emerging from bankruptcy as a member-owned hardware co-op, the board has a legal and fiduciary responsibility to share information regarding a possible purchase, the letter explained.
“The BOD is required by the bankruptcy process to seriously evaluate and consider any options presented,” the letter states. “However, the BOD remains committed to the preservation of our cooperative in order to ensure the long-term benefits that we have all come to depend upon from Handy.”
Under the informal proposals in question, Handy would operate as a subsidiary of or be consolidated into another distributor, the letter explained. “Handy’s current members would be encouraged to remain on as customers, but it would mean that our members likely would have no ownership or control over the business,” the letter states.
The March 28 further encouraged Handy members to support the co-op by buying more from Handy.
Handy’s board of directors includes Virgil Cox, Ike Epstein, Suzanne Elliott, Chris Court, Bob Wyrick, Ken Blackmon and Tommy Chauvin.