GE appears to be pulling inventory financing on Furniture Brands
Clint Engel -- Furniture Today, September 5, 2013
HIGH POINT — GE Capital Solutions appears be pulling the dealer inventory financing plug for Broyhill, Lane and other Furniture Brands International lines, according to a letter that went out to certain dealers.
Furniture Brands, however, said it believes the letter is an error and is attempting to fix the problem.
Dealer members of AVB BrandSource are receiving a letter from a portfolio manager for GE's Capital Solutions for the Home Product Industry this month stating that effective Sept. 12, it "will no longer finance the purchase of Furniture Brands International inventory," including, but not limited to, "programs supporting Broyhill and Lane products."
The Sept. 3 letter obtained by Furniture/Today stated CSHPI will honor financing approvals made before the effective date and invoices within 60 days of the approval.
The letter did not state the reasons for cutting off the financing link to supplier Furniture Brands, which faces mounting losses, shareholder lawsuits, and speculation that a bankruptcy filing is imminent.
GE Capital referred questions to spokesman Ned Reynolds, who was not able to respond immediately.
Mike Allen, vice president of BrandSource Home Furnishings, told Furniture/Today more than 80% of its members have a GE credit line and that the buying group so far has heard from roughly 10 to 15 retailers about the letter.
BrandSource is advising its members to further discuss it with their Broyhill, Lane and other Furniture Brands reps, he said. Both Lane and Broyhill are BrandSource vendor partners, with Broyhill being the larger source for the buying group.
"It's concerning," Allen said. "These are still some very valuable brands, but first and foremost, our dealers need to protect themselves and their customers."
The extent of the letter distribution and whether other retailers outside the buying group have received it are unclear.
"We think this is an error and we're in discussions right now with GE attempting to correct anything that may have caused this," said Lisa Hanly, Furniture Brands spokesperson.
The price of the company's stock, recently delisted from the New York Stock Exchange and now selling on the OTCQB marketplace, was up more than 12% in early morning trading today, selling for about 62 cents.
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