The TCR reports Harry & David Holdings, Inc., a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts marketed under the Harry & David®, Wolferman's(R) and Cushman's(R) brands, on March 28 announced it has reached an agreement with holders of approximately 81% of its senior notes on the terms of a reorganization that will eliminate substantial indebtedness and provide equity financing to restructure the Company’s balance sheet.
In order to implement the agreed upon restructuring, Harry & David has filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 11-10884).
A copy of Harry & David Holdings' Chapter 11 petition and list of 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/deb11-10884.pdf
The Company intends to use the Chapter 11 process to facilitate a financial and operational restructuring designed to restore Harry & David to long-term financial health while continuing to operate in the normal course of business without interruption.
As a part of the pre-arranged restructuring, the Company has entered into an agreement with certain holders of the Company’s senior notes. Supporting noteholders agreed to vote in favor of the Company’s pre-arranged plan and exchange their notes for common equity. In addition, they have agreed to backstop a $55 million rights offering that will provide Harry & David with the necessary equity financing to emerge from Chapter 11. Other noteholders and prepetition creditors will be offered the opportunity to participate in the rights offering. Successful implementation of the proposed plan would result in the full conversion into equity of the Company’s $198 million of senior notes as well as a significant amount of the Company's pre-petition general unsecured obligations.
In conjunction with its filing, the Company is seeking approval to enter into a $100 million first-lien debtor-in-possession (DIP) revolving credit facility, which will be provided by the Company’s existing secured lenders, and a $55 million second-lien DIP term loan, which will be provided by holders of the Company’s senior notes. The proposed DIP financing will help support Harry & David’s reorganization plans and enable normal post-petition operation of its business, including timely payment of employee wages, benefits and other obligations on an uninterrupted basis. In addition, the Company has also secured a commitment from its current lenders to provide up to $100 million in exit financing to facilitate the plan of reorganization. The Company has also filed a number of customary first day motions with the Bankruptcy Court to support ongoing operations.
“We believe that entering into this agreement provides the best opportunity for Harry & David to restructure its balance sheet on an expedited basis, strengthen its operations and create long-term value, while continuing to provide customers with the highest quality products and service,” said Kay Hong, Chief Restructuring Officer and interim Chief Executive Officer. “Harry & David is an iconic brand, and we believe this is an important first step to position the business for long-term profitable growth. We greatly appreciate the support of our lenders, noteholders, customers, vendors and employees. Their continued support is vital to our success.”
The Company expects no interruptions to customer service throughout the process. Consumers can continue to purchase Harry & David products online at www.harryanddavid.com, through catalog orders, and at the 70 Harry & David stores nationwide. The Company will continue honoring its Fruit-of-the-Month Club®, gift cards and other customer programs. Customers may continue to direct inquiries to Harry & David’s customer support at (877) 322-1200.
Vendors and other stakeholders can obtain additional information about the reorganization by visiting www.gcginc.com/cases/had or by calling (888) 425-7040. During the Chapter 11 process, the Company expects to pay for post-petition purchases of goods and services in the ordinary course of business.
Harry & David’s investment banker is Rothschild Inc., its legal advisor is Jones Day, and its financial advisor is Alvarez & Marsal.
The Company's bondholders are being advised by Stroock & Stroock & Lavan LLP, as legal counsel, and Moelis & Company as financial advisor.
About Harry & David Holdings, Inc.
Harry & David Holdings, Inc. is a leading multi-channel specialty retailer and producer of branded premium gift-quality fruit and gourmet food products and gifts marketed under the Harry & David®, Wolferman’s® and Cushman’s® brands. You can shop our products online at www.harryanddavid.com, www.wolfermans.com, and www.honeybell.com, or visit one of our 70 stores across the country.
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