by Affiliate of Nexus Capital Management identified as stalking horse bidder to acquire company assets and business operations
COLUMBUS, Ohio — Retailer Big Lots has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Delaware and has reached an agreement to sell its assets and ongoing business operations to an affiliate of Nexus Capital Management.
The company said that while its underlying performance has been improving, its board conducted a review of alternatives and determined that entering into a sale agreement with Nexus and initiating a court-approved sale process “is the best path forward to maximize value and ensure continued operations.”
It said as part of the sale process, it is continuing to assess its operational store footprint, a process that will include closing additional stores and evaluating and optimizing its distribution center model.
“Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers,” said Bruce Thorn, president and chief executive officer. “To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner.”
“We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts,” he added. “The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value.”
The company said that under the terms of the sale agreement, Nexus has been identified as the “stalking horse bidder” as part of a court-supervised auction process pursuant to section 363 of the U.S. Bankruptcy Code. The sale also is subject to higher or “otherwise better offers,” court approval and other conditions. If Nexus is the winning bidder, the parties said they expect to close the sale during the fourth quarter of 2024.
As part of the court-supervised process, Big Lots said it has secured commitments for $707.5 million in financing, including $35 million in new financing from certain of its current lenders, “in the form of a post-petition credit facility,” also known as Debtor In Possession financing. The company said that with court approval, the DIP financing facility along with cash generated from the company’s ongoing operations, “are expected to provide sufficient liquidity to support the company while it works to complete the sale transaction.”
Big Lots will report its full second-quarter results on Sept. 12.
“Despite a challenging consumer environment and financial pressures facing our business, we are pleased to have achieved underlying comp sales, gross margin and operating expenses in line with our guidance,” Thorn said. “Underlying comp sales improved sequentially relative to Q1 on a year-over-year basis and gross margins significantly improved, driven in part by advancing our five key actions, particularly through increasing our extreme bargain offerings. Additionally, Q3 to date is off to a good start, with a significant sequential improvement in underlying comp sales relative to Q2, as well as underlying gross margin expansion versus last year. We expect the positive momentum to continue into the back half of the year.”
