Orchard Brands, which has been on the market since the fall, is restructuring: The multititle mailer on Jan. 19 filed a voluntary petition for Chapter 11.
Orchard Brands, which is owned by Golden Gate Capital, will use Chapter 11 to reorganize debts while continuing to operate business as usual. Under the proposed restructuring, Orchard Brands is looking to reduce its debt by more than $420 million to approximately $310 million, according to a press release.
Orchard Brands expects to emerge from Chapter 11 in three to four months, and said it has already secured a commitment from its current lenders to provide up to $120 million in exit financing to consummate its Chapter 11 plan.
The company filed for Chapter 11 is U.S. Bankruptcy Court for the District of Delaware under the name Appleseed’s Intermediate Holdings, and has set up an information page at http://appleseedsrestructuring.com.
In a press release, Orchard Brands CEO Neale Attenborough said his company is profitable, but needs to restructure to ensure its long-term success.
Stuart Rose, managing director with investment firm Tully & Holland, wasn’t surprised by the announcement. Orchard Brands had too much debt to sustain the economic model, he says. “This is the best solution for the operating company in the long run. Buying and merging companies has been expensive.”
By filing Chapter 11, Rose says, Orchard Brands reduces the carrying costs from all its acquisitions – at a cost to the shareholders and other stakeholders – “so it can leverage the synergies of the brands and lists it owns.” This will accelerate growth in the long run, he says. “Orchard Brands will be a stronger company after this process than before.”
Orchard Brands is #26 on the 2010 MCM 100, includes 17 titles: Appleseed’s, Bedford Fair Lifestyles, Blair, Coward, Drapers & Damon’s, Gold Violin, Haband, Intimate Appeal, Linen Source, Monterey Bay, Norm Thompson, Old Pueblo Traders, Sahalie, Solutions, The Tog Shop, Willow Ridge, and WinterSilks.
Orchard Brands laid off 33 people in November as part of an “ongoing integration” of women’s apparel catalogers Willow Ridge and Bedford Fair Lifestyles. The company said then that the layoffs had nothing to do with a potential sale.
And in December, Orchard Brands announced plans to move 75 to 100 jobs from its Beverly, MA-based distribution center to its Blair Corp. unit’s fulfillment facility located in Irvine, PA this spring.