Bush in Chapter 11; creditors to own co.
Paul Bush resigns as CEO of RTA major
By Tom Edmonds -- Furniture Today, April 5, 2004
JAMESTOWN, N.Y. — Ready-to-assemble and case goods manufacturer Bush Inds. has filed for Chapter 11 bankruptcy court protection from creditors.
Bush executives said operations will continue and the company intends to repay debts in full and complete its restructuring within four months.
The biggest change will be a new set of owners as all common stock is turned over to creditors.
In a reorganization plan developed with lenders, senior debt of more than $160 million will be restructured, with about $70 million refinanced through 2006 and the balance converted into the new ownership equity.
Paul Bush has resigned as chairman, CEO and director, although he remains an adviser to management during the restructuring. Michael Bueznow, a senior managing director at FTI Consulting with 15 years of corporate restructuring experience, will serve as interim CEO. The balance of the management team will remain in place, and a permanent CEO will be named later. David Dawson has been named interim chairman.
In its filing, Bush lists total assets of $53.3 million and total debts of $169.6 million. Bush's largest creditor is JPMorgan Chase Bank, which is owed $163 million.
Bush indicated that it will continue to pay its pre-filing operating debts to all vendors who continue to extend regular trade credit. Wages and benefits also will continue, with court approval.
Company executives said a new ownership group will be announced soon. The new owners will buy their stake from JPMorgan Chase, and the publicly held company will become a closely held concern.
The past four years have been tough for RTA manufacturers. Bush, whose annual sales dropped from a peak of $451.2 million in 2000 to $340.2 million in 2002 and $224.7 million through the first nine months of 2003, was not immune.
Coming off a five-year growth spurt fueled by the onset of personal computers as a household appliance and a generally robust economy in the late 1990s, flat-pack furniture makers started the new millennium with a kick in the gut when several big-box retailers closed or retrenched. Ames, Caldor, Bradlees and Ward's, once strong RTA merchants, are gone. Further reducing the retail opportunities for RTA, Sears eliminated its furniture department and Kmart closed hundreds of stores
Because of some of its strategies, Bush appeared to have greater exposure than its competitors to these and other challenges.
In the boom times, Bush seemed to be strongest among RTA furniture makers in attacking the small-business opportunity with commercial-quality work stations and furniture systems — which were picked up by all three major office product superstores as well as by some mid-market office furniture dealers.
But once the Internet economy bubble began to burst in April 2000, the office furniture business went through its worst slump since World War II with a three-year sales decline of close to 40%.
Bush also made a strong play for step-up price points, and when recession came in 2001, it had little promotional product to offer discounters such as Wal-Mart and Target. The discount channel continues to be a weakness for Bush.
The company has made efforts to regain traction. For the past two years, it has been trying to build momentum for its Eric Morgan brand of assembled case goods. Last spring, as part of a restructuring, the company closed its RTA plant in St. Paul, Va., and dedicated its plant in Erie, Pa., to production of Eric Morgan promotional case goods.
RTA product is produced at the headquarters plant in Jamestown, N.Y.
While the Eric Morgan line is attempting to gain a foothold with furniture retailers, Bush's strengths continue to be flat-pack furniture for entertainment and office. The company has distribution with the top office products superstores — Office Depot, OfficeMax and Staples — and with electronics superstores Best Buy and Circuit City.
In addition to furniture, Bush Inds. is a supplier of surface technologies for cell phones and other applications. Bush Furniture North America markets through four brand names: Bush, for RTA; Bush Business Furniture, targeting office furniture dealers; Eric Morgan, for assembled case goods; and Rohr Furniture. Bush Furniture Europe sells commercial and residential furniture from its factory in Germany.
