Orchard Supply Hardware Receives Approval of First Day Motions Ensuring Business Continuity Throughout Its Restructuring and Sale Process
SAN JOSE, Calif.--(BUSINESS WIRE)-- Orchard Supply Hardware Stores (Nasdaq: OSH ) , a neighborhood hardware and garden store focused on paint, repair and the backyard, today announced that the U.S. Bankruptcy Court for the District of Delaware has approved all of the First Day Motions related to its voluntary Chapter 11 process initiated June 17, 2013. These motions collectively will enable the Company to continue operating its business as usual as it completes its Chapter 11 case.
Among the approved motions, the Court granted Orchard access to $177 million in debtor in-possession (“DIP”) financing from Wells Fargo Bank, the Company’s existing ABL lender, and its Term Loan Lenders. This financing, in addition to Orchard’s ongoing cash flow, will ensure the Company is able to continue meeting its financial obligations throughout the Chapter 11 case.
The Court also approved motions giving Orchard authority to, among other things, pay employee wages and benefits as usual throughout the Chapter 11 process, including health and medical benefits, paid time off, expense reimbursement and other incentive programs as well as maintain its Club Orchard customer rewards program, continue coupons and promotions, honor its gift cards and otherwise serve its customers as usual. Additionally, Orchard was granted approval to accept bids from companies to manage store closing sales for an initial eight stores, with potential additional stores to be determined as the Chapter 11 process continues.
“The motions approved today will help ensure we continue to operate our business as usual and uphold our commitments to all of our stakeholders while we work to achieve our financial objectives,” said Mark Baker, Orchard President and Chief Executive Officer. “This is a very important milestone in the Chapter 11 process, and we thank the Court for its careful consideration of our requests. We are confident that Orchard is on the right path for long-term success through the actions we are taking with our business and certain stores. We are grateful for the support we have received from our lenders, associates, customers and supplier partners as we work to achieve a sustainable capital structure for our business.”
Orchard previously announced June 17, 2013, that it has reached an agreement through which Lowe’s Companies, Inc. will acquire the majority of its assets for $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s supplier partners. To facilitate the sale and restructure its balance sheet, Orchard filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. The agreement with Lowe’s comprises the initial stalking horse bid in the Court-supervised auction process under Section 363 of the Bankruptcy Code.
Under the terms of the agreement, Orchard will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates. The Company also will benefit from the financial stability of its new corporate parent which, combined with the benefits of its balance sheet restructuring, will allow Orchard to continue its repositioning and growth strategy.
Orchard’s customers and suppliers can access additional information about the Company’s Chapter 11 filing on its dedicated website, www.OrchardRestructuring.com. Orchard also has established a supplier support center, which may be reached at 855-529-6819 or email@example.com.
Orchard is advised in this financial restructuring by Moelis & Company, FTI Consulting, and DLA Piper.
About Orchard Supply Hardware
Orchard Supply Hardware Stores Corporation operates neighborhood hardware and garden stores focused on paint, repair and the backyard. The Company was founded as a purchasing cooperative in San Jose in 1931. Today the stores average approximately 36,000 square feet of interior selling space and 8,000 square feet of exterior nursery and garden space. As of June 16, 2013 the Company has 89 stores in California and two stores in Oregon. For more information, visit http://osh.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release (including information incorporated or deemed incorporated by reference herein) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projections as well as the current beliefs and assumptions of the Company’s management. Words such as “guidance”, “outlook”, “believes”, “expects”, “appears”, “may”, “will”, “should”, “intend”, “target”, “projects”, “estimates”, “plans”, “forecast”, “is likely to”, “anticipates”, or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact and other estimates, projections, future trends and the outcome of events that have not yet occurred referenced in this press release, is a forward-looking statement. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, factors discussed under the section entitled “Risk Factors” in the Company’s reports filed with the Securities and Exchange Commission, the ability to conclude the transaction with Lowe’s or another bidder in the Court-supervised auction process under Section 363 of the Bankruptcy Code and the challenges and risks associated with operating the business under Chapter 11 protection. Many of such factors relate to events and circumstances that are beyond the Company’s control. You should not place undue reliance on forward-looking statements. The Company does not assume any obligation to update the information contained in this press release.
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