The highest – and only – bid for bankrupt Furniture Brands International was accepted by the U.S. Bankruptcy Court for the District of Delaware on Friday, paving the way for the company to stay in business.
KPS Capital Partners was the stalking-horse bidder for Furniture Brands, with an offer of $280 million.
When Furniture Brands filed for Chapter 11 on Sept. 9, another bidder had emerged, Oaktree Capital Management.
Oaktree’s initial bid was $166 million, but did not include the purchase of Lane Furniture Industries. Lane, which is headquartered in Tupelo, employed about 1,400 workers in Northeast Mississippi.
Furniture Brands initially favored Oaktree as the stalking horse, even as KPS entered the picture. KPS also said it wanted Lane in its bid.
A bidding war ensued with Oaktree eventually bumping its offer to $260 million. KPS’ last offer was $20 million higher, the bid amount that was approved Friday.
“We congratulate KPS and firmly believe that this transaction is the best outcome for all of our stakeholders,” said Furniture Brands Chairman and CEO Ralph Scozzafava. “KPS has a long track record of providing companies that have undergone restructurings with the operational expertise and financial strength they need to preserve their market leadership as strong standalone businesses positioned for future growth.”
Furniture Brands and KPS expect to complete the transaction in the next several business days.
Scozzafava also said, “We are quite pleased that KPS has extended an offer of employment to substantially all of our employees who will help build a successful future for Furniture Brands.”
After KPS was named the stalking horse bidder on Oct. 3, it provided Furniture Brands with a $190 million debtor-in-possession financing to support its operations.
On Thursday, the Pension Benefit Guaranty Corp. said it would pay the benefits of more than 19,000 current and future retirees of Furniture Brands’ underfunded plan. The PBGC estimates Furniture Brands’ retirement plan is only 55 percent funded, with about $337 million in assets to pay $609 million in benefits. The agency will cover $270 million of the $272 million difference.