Handy faces future as private distributor
Back in March, Handy Hardware was a member-owned co-op intent on staying that way, even as it struggled through a reorganization under bankruptcy protection.
But with a stroke of a pen, that all changed when it was announced last week that Greenwich, Conn.-based private equity firm Littlejohn Management Holdings would acquire Handy and run it as an independent distributor.
Despite the loss of the co-op structure, it was the best result the members could have hoped for, according to Handy management.
“They wanted to see Handy remain independent,” said Morrie Aaron, president of MCA Financial Group, Handy’s financial advisory firm. “And it has. It’s still there to provide a consistent transparent, no-frills low-price model around which they can build their business.”
According to Handy, if the deal is approved by the court, then Handy would emerge from bankruptcy this summer as a subsidiary of a Littlejohn portfolio company, while maintaining its Handy Hardware brand.
The deal, which has the support of Handy’s board of directors, its member advisory committee and member equity committee, is expected to gain court approval in July 2013, Handy said.
According to Aaron, and subject to bankruptcy court approval, the deal includes Littlejohn refinancing or paying on the effective date: the $15 million in Debtor in Possession funds currently outstanding; roughly $8 million pre-petition unsecured creditor claims; and the assumption of post-petition accounts payable, and investment of working capital.
For that, Littlejohn takes Handy’s inventory, accounts receivable, brand and miscellaneous assets.
Mickey Schulte, VP marketing and purchasing, said the deal achieves the goal of exiting bankruptcy as an independent distribution company offering low prices and good service. “Our members will now become customers,” he said. “But that doesn’t change anything, they are still family to us.”
Handy described Littlejohn as a company with “substantial holdings in the wholesale distribution business and the hardware industry.” Its portfolio includes hardware products distributor Howard Berger Co. and Installed Building Products.
Aaron said that Howard Berger and Handy are expected to be sister companies, operating independently of each other.
In a note to members alerting them of the agreement, Handy’s board of directors explained: "Current Handy member dealers will not have to contribute additional equity as part of the plan, and Littlejohn will also eliminate the 2% warehouse service fee upon closing."
Handy management intends to explain the changes to current Handy dealers at a series of town hall meetings in the coming weeks.
New leadership for remodeler group
The National Association of the Remodeling Industry (NARI) named immediate past president Dean Herriges, of Urban Herriges & Sons Inc. in Mukwonago, Wis., as its chairman of the board and elevated Art Donnelly, of Legacy Builders & Remodelers Corp. in Mount Sinai, N.Y,. to the office of president.
“This has been a strong, transitional year for the remodeling industry, coming out of a challenging economic climate into a growth period,” Herriges said. “NARI has strengthened strategic alliances, launched a research program and continued representation in Washington are focused on sustaining future growth of NARI member businesses as the recovery continues.”
Donnelly assumed the role of president after serving as president-elect and treasurer in the past year. His experience in NARI leadership includes currently serving on the NYC/LI NARI chapter board of directors for seven years. During that time he was awarded with several honors, including the Outstanding Service Award from 2004-2006, Al Hovanian Memorial Chapter Award in 2006 and 2009, and most recently the 2011 Chapter President’s Award.
For the upcoming year, Donnelly is focused on refining NARI’s direction and the direction of the industry, drawing from shifts in remodeling trends and technological advancements, according to NARI. “We’re re-evaluating NARI’s 2010 Strategic Plan to ensure full representation of our vision and goals in the new remodeling climate,” Donnelly said. “In addition, NARI will encourage professionalism in the industry through increased awareness and commitment to the highest standards in members. Finally, I hope to continue to advance our legislative agenda and member participation to support our industry in a year of predicted growth.”
The remaining officers, also elected and announced during the meeting, include: president-elect Kevin Anundson, of Owner Assisted Remodeling, in Elm Grove, Wis.; treasurer Judy Mozen of Handcrafted Homes, in Roswell, Ga.; and secretary H. Dale Contant of Atlanta Design & Build, Marietta, Ga.