RoomStore aims to grow
By Clint Engel -- Furniture Today, June 27, 2005
Richmond, Va. — The RoomStore, the surviving arm of once-giant retailer Heilig-Meyers, has emerged from bankruptcy with a new board of directors, an untouched $35 million credit line and an eye on expansion in existing markets.
Under terms of the plan, old equity interest in the 65-unit Top 100 RoomStore has been canceled, and unsecured creditors will receive new common stock in the company. Heilig-Meyers, its largest creditor, will receive about 67% of the stock.
Under a newly amended reorganization plan, Heilig-Meyers then will liquidate its RoomStore stake, along with other assets, to resolve outstanding claims in its bankruptcy case, which dates from August 2000.
The U.S. Bankruptcy Court handling the Heilig-Meyers case has set hearings Sept. 26–27 to consider confirming the Heilig plan.
Richmond, Va.-based RoomStore, meanwhile, with stores in Pennsylvania, Maryland, Virginia, North and South Carolina and Texas, has moved out of Heilig's shadow, with its separate emergence and the $35 million working capital facility through Bank of America, in place since June 1.
President and CEO Curtis Kimbrell said the emergence, as part of a nearly five-year restructuring process, would not have been possible without the support of RoomStore's employees, customers, suppliers and creditors.
He said RoomStore's future rests on four pillars — a tested management team, the new board, strong relationships with vendors and service providers, and the retailer's strong balance sheet. He wouldn't give details, but said RoomStore is profitable today and, as of early June, had no debt.
Kimbrell is one of five members of the new board. The others are independent directors Robert Shaffner, Ron Kaplan, Eugene Davis and Martin Stringer.
Shaffner is the former chief financial officer of Klaussner Furniture Inds., and Kaplan is a former president of retailer Levitz.
Davis is chairman of Livingston, N.J.-based Pirinate Consulting Group, and Stringer is with the Oklahoma City-based law firm McKinney and Stringer, which specializes in Sarbanes-Oxley securities law compliance and other corporate governance issues.
Kimbrell pointed to Stringer's and Davis's "financial savvy and capital markets knowledge."
A board chairman has yet to be elected.
Kimbrell said that, during the restructuring, RoomStore was able to maintain and strengthen its relationships with critical suppliers and service providers, expanding credit lines and terms to ensure adequate inventories and merchandise flow.
Key resources include GuildCraft of California, Klaussner, Palliser, Franklin, Davis International, Liberty, Holland House, and Simmons and Sealy in bedding.
"Our strong balance sheet and working capital facility are more than adequate to support the business operations as well as expansion plans within our current markets," Kimbrell said.
RoomStore plans to open one new store this year, but he declined to name the market or elaborate on expansion plans beyond 2005. He said total fiscal year revenues are projected to be about $360 million, which would be up slightly from $358.2 million in the most recent year ended Feb. 28.
The midpriced RoomStore is ranked No. 25 on Furniture/Today's Top 100, with stores in metro Baltimore/Washington, Richmond, Va., Charleston, S.C., and other markets in Virginia and the Carolinas, and in Dallas, Houston, San Antonio and Austin, Texas.
"I'm glad that some piece of Heilig-Meyers has survived," said Jerry Epperson, industry analyst and a managing director of Mann, Armistead & Epperson. From his Richmond-based company, Epperson had a front row seat to Heilig's rapid rise and even quicker demise.
"I think it just speaks volumes that Curtis (Kimbrell) was able to keep this thing together and keep his team together throughout all the distractions and all of the costs that were involved in this (bankruptcy) process," he said.
| Acknowledgements | ||
| News Editor Jay McIntosh contributed to this story. | ||
