Orchard Supply Hardware Stores (NASDAQ:OSH), a neighborhood hardware and garden store focused on paint, repair and the backyard, today announced that it has reached an agreement through which Lowe’s Companies, Inc. (NYSE:LOW) 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 has 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, Lowe’s would acquire no less than 60 of Orchard’s stores, based on further due diligence on the store locations. The Company expects to complete the process in approximately 90 days, pending receipt of the necessary approvals from regulators and the Bankruptcy Court.
Orchard fully expects to operate its overall business and the vast majority of its stores as usual during its financial restructuring. To this end, the Company has secured commitments for $177 million in debtor-in-possession (“DIP”) financing from Wells Fargo Bank, the Company’s existing ABL lender, and its Term Loan Lenders which, in addition to Orchard’s ongoing cash flow, will ensure it is able to continue meeting its financial obligations throughout the Chapter 11 case. In addition, the Term Loan Lenders have formally agreed to support the acquisition agreement with Lowe’s as the stalking horse. Orchard also has filed a series of first day motions seeking authority to pay employee wages and benefits, honor customer gift cards and Club Orchard incentives, and otherwise manage its day-to-day operations as usual.
Orchard expects to pay suppliers in the normal course for all goods and services delivered on or after June 17, 2013. Payment for goods and services delivered prior to the filing will be addressed through the Chapter 11 process. It is currently expected that the vast majority of these claims will be assumed by Lowe’s as part of the sale agreement.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV