Leading Brands Pet Supplies Plus, The Vitamin
Shoppe, and Buddy's Home Furnishings to Serve Customers as Usual at
Locations Nationwide and Online as Part of Strengthened Go-Forward
Enterprise
Commences Voluntary Chapter 11 Cases to
Implement Agreed-Upon Restructuring Plan
$250 Million of
DIP Financing Committed to Support Ordinary Course Operations
Across Businesses
American Freight to Wind Down Operations and
Commence Store Closing Sales on November
5
DELAWARE, Ohio, Nov. 3, 2024
/PRNewswire/ -- Franchise Group, Inc. ("FRG" or the "Company")
today announced that it has entered into a restructuring support
agreement ("RSA") with holders of approximately 80% of its first
lien debt on a comprehensive solution to strengthen FRG's capital
structure and best position its leading brands – Pet Supplies Plus,
The Vitamin Shoppe, and Buddy's Home Furnishings – for continued
sustainable growth.
The RSA contemplates the proposed equitization of the first lien
debt into 100% of the equity in the reorganized enterprise, which
would substantially reduce the Company's debt, enhance liquidity,
and strengthen the enterprise for the benefit of Pet Supplies Plus,
The Vitamin Shoppe, and Buddy's Home Furnishings and their
stakeholders.
To implement the agreed-upon restructuring, FRG, its operating
businesses, and the Company's other affiliates commenced voluntary
Chapter 11 proceedings in the U.S. Bankruptcy Court for the
District of Delaware. Franchised
locations of FRG's brands are not part of the proceedings.
As part of the restructuring plan, the first lien lender group
has committed $250 million in
debtor-in-possession financing which, subject to Court approval and
together with cash on hand, will provide FRG with ample liquidity
to maintain operations across its businesses and fulfill go-forward
commitments to employees, customers, vendors, franchise partners,
and other stakeholders of FRG, Pet Supplies Plus, The Vitamin
Shoppe, and Buddy's Home Furnishings in the ordinary course.
"Today's announcement to de-lever our balance sheet is a pivotal
step forward in enabling our market-leading businesses Pet Supplies
Plus, The Vitamin Shoppe, and Buddy's Home Furnishings to realize
their full potential," said Andrew
Laurence, FRG's President and Chief Executive Officer. "Each
of these businesses has a demonstrated value proposition and
provides great products and services to customers, which they will
continue to do seamlessly during this process. Strengthening FRG's
balance sheet will allow us to enhance our support for these
businesses as they advance their growth trajectories."
As part of this strategy, FRG has determined to wind down
American Freight, which has struggled due to sustained inflation
and macroeconomic challenges facing the large durable goods sector.
It will be commencing store closing sales at locations nationwide
and online on November 5.
The Company is filing with the Court a series of customary
motions to maintain business-as-usual operations on all fronts for
Pet Supplies Plus, The Vitamin Shoppe, Buddy's Home Furnishings,
and FRG during the process. These "first day" motions include
requests to continue to pay wages and provide benefits to employees
in the ordinary course and offer relied-upon customer programs.
Vendors of the go-forward operating businesses will be paid in the
ordinary course for authorized goods received and services rendered
after the filing.
As part of this process, FRG also intends to engage in a
marketing process via Court-approved bidding procedures, which will
ensure that the Company is maximizing value and best positioning
its operating businesses for long-term success as it pursues
confirmation of the agreed-upon prearranged Chapter 11 Plan. The
Plan and an explanatory Disclosure Statement will be filed with the
Court in the coming days.
Court filings and other information regarding the Chapter 11
proceedings can be found at https://cases.ra.kroll.com/FRG. Vendors
with questions can call (844) 285-4564 (toll-free) and +1 (646)
937-7751 (international) or email FRGInquiries@ra.kroll.com.
Willkie Farr & Gallagher LLP
and Young Conaway Stargatt &
Taylor, LLP are serving as legal counsel, AlixPartners is serving
as financial advisor and Chief Restructuring Officer, and Ducera
Partners is serving as investment banker to the Company. Paul
Hastings LLP is serving as legal counsel and Lazard is serving as
investment banker to the first lien ad hoc group.
Media Contact:
Kekst CNC
Jeremy Fielding / Sherri L. Toub / Ross
Lovern
FRGMedia@kekstcnc.com
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content:https://www.prnewswire.com/news-releases/franchise-group-reaches-agreement-with-first-lien-lenders-to-substantially-reduce-debt-enhance-liquidity-and-best-position-profitable-operating-businesses-for-sustainable-growth-302294886.html
SOURCE Franchise Group, Inc.