Creditors support $280M KPS bid for Furniture Brands assets
$20 million higher than Oaktree's bid
Heath E. Combs -- Furniture Today, October 1, 2013
HIGH POINT — The unsecured creditors committee in Furniture Brands International's Chapter 11 bankruptcy is supporting a final $280 million stalking horse bid from KPS Capital Partners it says is $20 million higher than a revised offer last week from Oaktree Capital Partners.
FBI said it has chosen Oaktree's revised stalking horse bid totaling $260 million, according to court documents. The bid includes a reduced breakup fee from $6 million to $4 million.
Last week Roberta A. DeAngelis, U.S. Trustee for the case, filed an objection against FBI's breakup fee proposal, saying it was excessive. The breakup fee would be paid to the stalking horse bidder and offers protections for the bidder's due diligence costs.
Other bidders would still be able to submit bids for the assets. According to court documents, Oaktree and KPS are proposing various dates in December for a bid deadline, auction, sale hearing and closing.
While FBI is motioning for Oaktree as stalking horse, in bidding that occurred through last week, KPS emerged with the highest final bid by offering $280 million, according to a Monday motion from the unsecured creditors committee.
The total of both bids includes the company's Lane assets, which Furniture Brands originally had said would be sold separately from Thomasville, Broyhill, Drexel Heritage and other brands. Oaktree's bid, however, still leaves room for a Lane sale prior to Oaktree's obtaining FBI's assets.
A hearing is set for Wednesday, Oct. 2, on the selection of Oaktree as the stalking horse bidder and on sale procedures. Several other motions also will be heard Wednesday, including one from FBI that could lead to payment of more than $3 million to seven executives as incentives to complete the sale of assets in the bankruptcy.
Oaktree's initial first-day bid for FBI totaled about $215 million. That day KPS submitted another bid for FBI's assets of $225 million.
Last Monday, KPS upped its offer for all the company's assets - including Lane - to $250 million. FBI and the unsecured creditors gave KPS and Oaktree until Thursday last week to submit final offers.
FBI received a subsequent offer from Oaktree for $260 million and a reduced breakup fee of $4 million.
KPS then made another offer for a total price for all FBI assets of $270 million, and then another proposal for $280 million, plus a breakup fee of $4 million.
KPS indicated it is only interested in the transaction if Lane continues operations and will not participate in any future auction if it is not the stalking horse bidder.
"The actions of the debtor since the petition date have evidenced to Lane employees, customer and vendors the intention to liquidate Lane," the KPS proposal letter said.
The unsecured creditors committee said that accepting the low Oaktree bid is an unsound decision and that the KPS asset purchase agreement offer represents "materially better terms than the Oaktree agreement." The committee also wants more oversight of its bankruptcy budget.
It also wants more oversight in the sale process - since FBI has over $300 million in unsecured debt, while it said the company's secured creditors are over-secured.
They also argued that bidding for just a portion of FBI's assets should be allowed, not just as combination bids of assets in FBI's proposed sale procedures.
"Each additional dollar increase from a sale of debtors' assets will increase the recovery to the estate, and thus, to unsecured creditors," the motion said.
Furniture Brands media officials said the company had no comment on the bidding process.
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