Orchard Supply moves forward with liquidation process
Following its asset acquisition deal with Lowe’s, Orchard Supply Hardware is moving forward with its effort to close underperforming stores and has won approval to seek bids from liquidators to hold going-out-of-business sales.
Bloomberg reported that U.S. Bankruptcy Judge Christopher Sontchi granted approval for a June 27 liquidator auction at a hearing Tuesday in Wilmington, Del. Orchard plans to close at least eight of its stores that are not due to return to profitability. The company also has the option to hold going-out-of-business sales at another of its 22 stores until July 31.
Liquidators Hilco Merchant Resources and Gordon Brothers Retail Partners have already jointly offered a 74% recovery on assets sold. Other liquidators will need to submit their bids by June 25, with the winner to be announced June 28.
Orchard would need to provide the joint venture with a $300,000 breakup fee in the event that it chooses a different liquidator, according to The Deal.
According to Bloomberg, Orchard Supply listed $441 million in assets and $480.1 million in debt in Chapter 11 papers filed Monday.
Lowe’s to buy assets of Orchard Supply
As part of Orchard Supply Hardware’s filing for Chapter 11 bankruptcy, the company has reached an agreement for Lowe’s to purchase the majority of its assets for $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s supplier partners. Under the terms of the agreement, Lowe’s, serving as “stalking horse bidder,” would acquire no less than 60 of Orchard’s stores, based on further due diligence on the store locations.
Orchard expects to operate its overall business and the majority of its stores as usual during its financial restructuring and has secured $177 million in debtor-in-possession financing from Wells Fargo Bank.
The retailer expects to pay suppliers in the normal course for all goods and services delivered on or after June 17, 2013, with payment for goods and services delivered prior to the filing addressed through the Chapter 11 process. Orchard Supply anticipates Lowe’s will assume responsibility for most of those payments.
Orchard says it will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates. The chain was spun off a standalone business from Sears in 2011.
“The steps we are taking today allow us to definitively address our balance sheet issues in order to fully execute on our brand transformation and growth strategies,” said Mark Baker, Orchard president and CEO. “We believe that Lowe’s offer is a validation of Orchard’s unique market opportunity and of our strategy to capture it. We are confident the steps we are taking today will allow us to achieve our financial and operational goals.”
Robert A. Niblock, chairman, president and CEO of Lowe’s, said Orchard has a good business model but has been saddled with debt, and the retailer’s neighborhood stores complement Lowe’s big-box stores and will also boost Lowe’s presence in California.
“Strategically, the acquisition will provide us with immediate access to Orchard’s high density, prime locations in attractive markets in California, where Lowe’s is currently underpenetrated, and will enable us to participate more fully in California’s economic recovery,” said Niblock.
The transaction is expected to be consummated through a court-supervised process under Section 363 of the U.S. Bankruptcy Code and is subject to an auction and bankruptcy court approval.
Parr Lumber’s Weekend Warriors extends its reach
Oregonian lumberyard Parr Lumber has widened its sphere of influence via the Pacific Northwest’s AM radio frequency. Its increasingly popular Weekend Warriors Home Improvement Radio Show has been picked up by stations across Oregon and Washington to deliver down-to-earth advice and market knowledge to homeowners throughout the region.
According to host Corey Valdez, Weekend Warriors is the only radio show in the nation that’s backed by a lumberyard, and it’s unique in its ability to draw on years of experience in the home improvement industry to deliver expert product recommendations in a conversational format.
Together with Tony Cookston, Valdez has been at the reins of Weekend Warriors for upwards of two years, but its recent expansion is an unprecedented advancement for the two radio personalities. Cookston and Valdez are both longtime employees of Parr Lumber; each brings something different to the table. The long-running joke is that Cookston is the "personality" and the bearer of product knowledge, while Valdez is the "know-how" with the handyman approach.
"We just like to have fun," said Valdez. "We want to help people stay inspired — a house isn’t maintance-free."
Listeners can submit questions via Facebook, email, text and more, though Weekend Warriors takes a more curated approach than shows like Handyman Bob, which invite listeners to call in to the show. Listeners will often ask for specific product recommendations, and the show will address pertinent topics, as well as provide an informative and entertaining synopsis of the market.
Weekend Warriors broadcasts on AM 860 in Portland on Saturdays and Sundays. It is now also available on the following AM stations: KPAM, KBND, KUGN, KWRO, KACI, KMED, KAST, KNPT, KEDO, KFLD, KGY and KVI.