School Specialty, Inc. (SCHS: Quote) Monday said it has filed voluntary petitions for reorganization, as it agreed to sell its assets as a going concern to an affiliate of private investment firm Bayside Capital, Inc., through a court-supervised sale process. The company expects to complete the sale in about 60 to 90 days. In pre-market trading, the shares fell about 56 percent.
The Greenville-based education company and certain of its units have filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware in order to facilitate the sale deal.
By realigning the organization, School Specialty intends to strengthen its financial condition by reducing burdensome amount of debt on its balance sheet and deliver better value for its customers.
Michael Lavelle, School Specialty’s president and CEO said, “We fully expect to continue normal business operations, providing quality, value-driven education products and excellent customer care and programs.”
According to the company, the announcement will enable it to sell the business on an expedited basis to Bayside Capital, or any higher or better bidder approved by the Court, and its emergence as owned by a financially stronger entity.
In connection with the filing, it has secured a new lending arrangement to be provided by its existing asset-based lenders. It has also secured a commitment for $50 million in additional capital in the form of debtor-in-possession financing from an affiliate of Bayside Capital.
The financing is to provide School Specialty with sufficient liquidity to operate the business and meet its ongoing obligations to customers, business partners, suppliers and employees through completion of the sale process.
Bayside Capital is an affiliate of H.I.G. Capital, a private investment firm with more than $10 billion of equity capital under management.
The Chapter 11 filings may not have any impact on the company’s operations in Canada, which would continue in the ordinary course without interruption, School Specialty added.
SCHS closed Friday’s regular trading at $0.5974 on the Nasdaq. In the pre-market activity, the shares are down 56.31 percent.
To receive FREE breaking news email alerts for School Specialty and others in your portfolio
by RTT Staff Writer
For comments and feedback: editorial@rttnews.comBusiness News