School Specialty Initiates Financial Restructuring and Enters Into Agreement With Private Investment Firm
28 January 2013 - 12:47PM
Receives Commitment for $50 Million in
Additional Financing
Sale and Restructuring to Be Implemented
Through Chapter 11 Process; Sale Subject to Court-Supervised
Auction for Higher or Better Offers
School Specialty Operations Continue
Without Interruption
School Specialty, Inc. (Nasdaq:SCHS) ("the Company") today
announced that it has entered into an asset purchase agreement with
an affiliate of Bayside Capital, Inc., under which School Specialty
proposes to sell its assets as a going concern through a
court-supervised sale process. To facilitate the sale transaction,
School Specialty and certain of its subsidiaries today filed
voluntary petitions for reorganization under Chapter 11 in the U.S.
Bankruptcy Court for the District of Delaware and is pursuing the
sale process under Section 363 of the Bankruptcy Code.
In connection with the filing, the Company has secured a new
lending arrangement to be provided by School Specialty's existing
asset-based lenders and a commitment for $50 million in additional
capital in the form of debtor-in-possession financing from an
affiliate of Bayside Capital. This financing is intended to provide
School Specialty with ample liquidity to operate the business and
meet its ongoing obligations to customers, business partners,
suppliers and employees through completion of the sale process.
Today's announcement will enable a sale of 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. The Company anticipates completing the sale
process in approximately 60-90 days.
School Specialty's President and CEO Michael P. Lavelle, said,
"We are pleased to have reached these agreements with Bayside, and
are confident School Specialty's business has a bright future. We
fully expect to continue normal business operations, providing
quality, value-driven education products and excellent customer
care and programs. Our customers remain a top priority and we plan
to meet all our customer commitments and maintain customer policies
and programs.
"We have made good progress in our turnaround strategy to
strengthen School Specialty's business by realigning the
organization to deliver better value for our customers and
improving the quality and efficiency of operations. In School
Specialty, we have a company with excellent potential but with a
burdensome amount of debt on our balance sheet. The actions we are
announcing today allow us to strengthen our financial condition as
we continue transforming School Specialty's business for the
future, including building our brands and product offerings and
positioning our business for long-term success as the funding
environment improves," Lavelle concluded.
School Specialty's Canadian subsidiaries are included in the
proposed sale but are not part of the Chapter 11. The Chapter 11
filings are not expected to have any impact on the Company's
operations in Canada, which will continue in the ordinary course
without interruption.
It is uncertain whether School Specialty shareholders will
receive any distribution from proceeds of a sale and whether these
securities will have any value following the Chapter 11 case.
Bayside Capital is an affiliate of H.I.G. Capital, a leading
global private investment firm with more than $10 billion of equity
capital under management.
The Company's financial advisor is Perella Weinberg Partners LP,
its restructuring advisor is Alvarez & Marsal North America,
LLC, and its restructuring counsel is Paul, Weiss, Rifkind, Wharton
& Garrison LLP and Young Conaway Stargatt & Taylor,
LLP. Bayside's legal advisor is Akin Gump Strauss Hauer &
Feld LLP.
Additional information about the restructuring is available on
the Company's website at www.schoolspeciality.com. Claims
information is available at www.kccllc.net/schoolspecialty or by
calling the School Specialty's new Restructuring Information Center
toll-free at (+1-877) 709-4758.
About School Specialty, Inc.
School Specialty is a leading education company that
provides innovative and proprietary products, programs and services
to help educators engage and inspire students of all ages and
abilities to learn. The company designs, develops, and
provides preK-12 educators with the latest and very best
curriculum, supplemental learning resources, and school
supplies. Working in collaboration with educators, School
Specialty reaches beyond the scope of textbooks to help
teachers, guidance counselors and school administrators ensure that
every student reaches his or her full potential. For more
information about School Specialty,
visit www.schoolspecialty.com.
Cautionary Statement Concerning Forward-Looking
Information
Any statements made in this press release about
future financial condition, results of operations,
expectations, plans, or prospects, constitute forward-looking
statements. Forward-looking statements also include those
preceded or followed by the words "anticipates," "believes,"
"could," "estimates," "expects," "intends," "may," "should,"
"plans," "targets" and/or similar expressions. These
forward-looking statements are based on School Specialty's current
estimates and assumptions and, as such, involve uncertainty and
risk. Forward-looking statements are not guarantees of future
performance, and actual results may differ materially from those
contemplated by the forward-looking statements because of a number
of factors, including the factors described in Item 1A of School
Specialty's Annual Report on Form 10-K for the fiscal year ended
April 28, 2012, which factors are incorporated herein by reference.
Except to the extent required under the federal securities laws,
School Specialty does not intend to update or revise the
forward-looking statements.
CONTACT: Investor Contact:
School Specialty, Inc.
Elizabeth Higashi, CFA
(920) 243-5392
IR@schoolspecialty.com
Media Contacts:
Kekst and Company
Kimberly Kriger/Nathan Riggs
(212) 521-4800