Harry & David Holdings Files Chapter 11
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Harry & David Holdings Inc. filed for Chapter 11 bankruptcy protection Monday, as the company has been brought down by the weak economy and increased pressure from competitors.
The Medford, Oregon-based company agreed on terms on a reorganization plans that will eliminate substantial debt, providing equity financing to restructure its balance sheet.
The provider of fruit baskets and other gifts and has see a harsh impact from the economic downturn. the company relies on discretionary spending, which is often the first to get cut from household and business budgets.
Harry & David does not plan to shut down at any point in the reorganization process.
The company having to cut 100 jobs last month and reporting that it lost 2% in revenue during the holiday season, Harry & David Holdings brought in Kay Hong as its interim CEO to help with its restructuring. Hong is a managing director at Alvarez & Marsal and will be replacing Steven Heyer, who remains as chairman.
Harry & David commented that ~81% of its senior note holders have agreed to vote for the reorganization plan and exchange their notes for common stock. The company notes that the holders have also agreed to backstop a $55 million rights offering that gives the company enough equity financing to exit Ch. 11 bankruptcy protection.
The company's note holders committed to $100 million in an exit refinancing plan, while it also is currently seeking approval to enter into a $100 million first-lien debtor-in-possession revolving credit agreement that would be provided by its existing secured lenders and a $55 million second-lien debtor-in-possession term loan that would be provided by senior note holders.
“We believe that entering into this agreement provides the best opportunity for Harry & David to restructure its balance sheet on an expedited basis, strengthen its operations and create long-term value, while continuing to provide customers with the highest quality products and service,” Hong said.
The Medford, Oregon-based company agreed on terms on a reorganization plans that will eliminate substantial debt, providing equity financing to restructure its balance sheet.
The provider of fruit baskets and other gifts and has see a harsh impact from the economic downturn. the company relies on discretionary spending, which is often the first to get cut from household and business budgets.
Harry & David does not plan to shut down at any point in the reorganization process.
The company having to cut 100 jobs last month and reporting that it lost 2% in revenue during the holiday season, Harry & David Holdings brought in Kay Hong as its interim CEO to help with its restructuring. Hong is a managing director at Alvarez & Marsal and will be replacing Steven Heyer, who remains as chairman.
Harry & David commented that ~81% of its senior note holders have agreed to vote for the reorganization plan and exchange their notes for common stock. The company notes that the holders have also agreed to backstop a $55 million rights offering that gives the company enough equity financing to exit Ch. 11 bankruptcy protection.
The company's note holders committed to $100 million in an exit refinancing plan, while it also is currently seeking approval to enter into a $100 million first-lien debtor-in-possession revolving credit agreement that would be provided by its existing secured lenders and a $55 million second-lien debtor-in-possession term loan that would be provided by senior note holders.
“We believe that entering into this agreement provides the best opportunity for Harry & David to restructure its balance sheet on an expedited basis, strengthen its operations and create long-term value, while continuing to provide customers with the highest quality products and service,” Hong said.
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