Tags: Brookstone | stores | bankruptcy | China

Brookstone Wins Approval of Sale, Plan to Exit Bankruptcy

Monday, 23 Jun 2014 03:48 PM

Brookstone Inc., the luxury-gadget retailer, won bankruptcy court approval of its plan to sell the chain to a group of Chinese buyers for about $174 million that will be used to pay creditors.

U.S. Bankruptcy Judge Brendan Linehan Shannon today in Wilmington, Delaware, approved the sale to a company backed by the Chinese conglomerate Sanpower Group and the Hong Kong-based private-equity firm Sailing Capital. The sale is the cornerstone of the retailer’s bankruptcy exit plan, also approved today.

The Sanpower and Sailing group outbid a unit of novelty-retailer Spencer Spirit Holdings Inc. at an auction this month, according to court documents. Spencer will get about $4.2 million in breakup fees and expense repayment. The buyers will continue operating almost all the 242 stores, closing two at most.

Brookstone will be “completely recapitalized” with a healthier balance sheet under the Sailing deal, with about $55.9 million in total liabilities, which is “$240 million less” than the current balance sheet, said Charles A. Dale, a lawyer for the company. The retailer is projected to make about $30.5 million in 2015 in earnings before interest, taxes, depreciation and amortization.

The Chinese group will pay $135.7 million in cash and $10 million in notes and assume about $28 million in Brookstone liabilities, court papers show.

Unsecured Creditors

Under the plan, unsecured creditors will share about $2.75 million from the sale proceeds after striking a deal to support the proposal. Bondholders, owed about $137.3 million, are getting less than 40 cents on the dollar, according to bondholder attorney Erez E. Gilad.

Brookstone, based in Merrimack, New Hampshire, filed for bankruptcy April 3 with a deal to sell its assets to Spencer for about $146.3 million. Brookstone struggled to adapt to a retail landscape where online competitors such as Amazon.com Inc. made its once hard-to-find products ubiquitous and consumers cut back on nonessentials.

The company saw sales fall 7.4 percent to $481.3 million for fiscal 2013 from the prior year, according to court papers. Adjusted Ebitda plummeted about 42 percent to $10.7 million.

Brookstone started in 1965 as a catalog business offering “hard-to-find tools” before opening its first store in 1973 in Peterborough, New Hampshire, according to its website. Most of its locations in the U.S. and Puerto Rico are in malls.

The company went private nine years ago in a $422 million deal backed by Temasek Holdings Pte, Singapore’s state-owned investment company, along with OSIM International Ltd. and JW Childs Associates LP. Singapore-based OSIM, Asia’s biggest maker of massage chairs, sells its products through Brookstone stores.

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Brookstone Inc., the luxury-gadget retailer, won bankruptcy court approval of its plan to sell the chain to a group of Chinese buyers for about $174 million that will be used to pay creditors.
Brookstone, stores, bankruptcy, China
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2014-48-23
Monday, 23 Jun 2014 03:48 PM
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