Funding also allows company to continue paying employee wages and benefits while its Chapter 11 bankruptcy and planned sale of assets and operations play out
COLUMBUS, Ohio — Retailer Big Lots said this week that it has received interim court approval for its first-day motions, including those measures that will allow the company to continue running its business throughout the Chapter 11 bankruptcy process.
The company said among other relief, the court granted it the ability to access a portion of its $707.5 million in post-petition financing that — combined with cash generated from its day-to-day business — is expected to provide sufficient liquidity at least over the short term. It also noted that the relief provided by the court will allow it to continue paying employee wages and benefits and making payments to certain critical vendors “in the ordinary course of business. The company expects to pay vendors in full under normal terms for any goods delivered and services provided after the filing.”
This statement refers to its Chapter 11 filing on Sept. 9, in which the company estimated between 5,000 and 10,000 creditors, which include its Top 30 unsecured creditors that are owed more than $74 million. In the same filing, it cited estimated assets between $1 billion and $10 billion and a similar amount of estimated liabilities.
The company said that a second-day hearing for the court to consider the company’s requested relief on a final basis is scheduled for Oct. 9.
Its statement also made reference to its planned sale of substantially all of the company’s assets and ongoing business operations to an affiliate of Nexus Capital Management, which has been identified as the stalking horse bidder. As the court has previously noted, the planned sale is also subject to “higher or otherwise better offers, court approval and other conditions.” If Nexus is declared the winning bidder, a closing is expected to occur in the fourth quarter.
Meanwhile, the company said that it continues its strategy of remaining a value-oriented retail resource for consumers in categories ranging from indoor and outdoor furniture to home textiles and other key segments of its business such as food, toys and pet supplies. The Broyhill brand is a key driver of its business both in furniture and soft goods, with furniture representing some 29% of sales in its latest quarter.
“With the court relief we have received today and the support of our lenders, we look forward to moving through this process and emerging as a stronger, more efficient company, well positioned to serve our customers, said Bruce Thorn, president and chief executive officer. “We thank our associates, customers, vendors and all of our stakeholders for their continued support as we work to achieve Big Lots’ full potential.”
In the investor relations section of its website, the company also offered answers to the following FAQs to provide further insight into its Chapter 11 filing and planned outcome.
They are as follows:
Why did Big Lots initiate a sale process?
+ Over the last several months, the company has taken a number of steps to execute on its strategic initiatives focused on improving sales and its long-term performance and profitability.
+ At the same time, the board of directors conducted a broad strategic review of alternatives and determined that entering into a sale agreement with Nexus Capital Management LP, and initiating the sale process, is the best path forward to maximize value and ensure continued operations.
What will happen to Big Lots common shares once the proposed sale transaction closes?
+ We expect to emerge from this sale process under new private ownership.
+ The treatment of common shares will be determined under a plan that is submitted to and approved by the court.
Will Big Lots issue quarterly earnings reports/hold investor calls during this process?
+ As part of the process, we will be required to periodically disclose certain financial results.
+ We do not intend to issue earnings press releases or hold quarterly conference calls during this process.
Should I sell my shares now?
+ We are not in a position to offer investment advice.
+ Please contact your financial advisor or broker to discuss options available to you.