Stanley Furniture Announces Agreement to Sell Substantially All of Its Assets
Furniture World News Desk on
11/21/2017
Stanley Furniture Company, Inc. (Nasdaq:STLY) announced that it has entered into an agreement to sell substantially all of its assets to Churchill Downs LLC (“Buyer”) for $11.5 million in cash, a $4.6 million subordinated secured promissory note of Buyer, a 5% equity interest in Buyer’s post-closing parent company and the assumption of substantially all the Company’s liabilities. The Company will retain certain assets, including cash in an amount up to $1.5 million, net operating loss carryforwards and any remaining payments under the Continued Dumping and Subsidy Offset Act. Buyer is a Delaware limited liability company formed by Walter Blocker, Chairman of Vietnam Trade Alliance in Ho Chi Minh City, to acquire the Stanley assets.
The closing of the asset sale, which is subject to approval by the Company’s stockholders, Buyer obtaining financing pursuant to existing financing proposals from North Mill Capital LLC and Endurance Capital Group, and other customary closing conditions, is expected to occur in the first quarter of 2018.
Upon the signing of the agreement, Buyer delivered into escrow a $750,000 deposit towards the $11.5 million cash consideration for the sale. If Buyer is unable to obtain financing or the agreement is terminated for certain other reasons, the Company is entitled to receive the deposit as a termination fee.
The Company does not intend to liquidate following the closing of the transaction. The Company’s board of directors will evaluate alternatives for use of the $11.5 million cash consideration, which are expected to include using a portion of the cash to either repurchase Company common stock or pay a special dividend to stockholders, and also using a portion of the cash to acquire non-furniture related assets that will allow the Company to potentially derive a benefit from its substantial net operating loss carryforwards. The Company anticipates transaction costs including professional fees and change in control payments to be approximately $2.5 million.
Walter Blocker, Chairman of Vietnam Trade Alliance in Ho Chi Minh City, stated that “Stanley is an iconic company in the furniture industry dating to 1924 with a history of excellence. We are proud to have entered into an agreement to acquire the Stanley business and look forward to building on the Company’s great past following the transaction closing.”
Stanley also announced that its board of directors elected Steven A. Hale II as Chairman of the Board. Mr. Hale replaces Mr. John “Ian” Lapey. Mr. Lapey will remain a director on the board. “The board of directors approved this transaction after an extensive review of alternatives. We appreciate Ian Lapey’s leadership as Chairman during this process” commented Mr. Hale.
Stephens Inc. served as financial advisor to the Company’s board of directors. Nu Advisory Group of Ho Chi Minh City advised on the transaction on behalf of Buyer.
More about Stanley Furniture: Established in 1924, Stanley Furniture Company, Inc. is a leading design, marketing and overseas sourcing resource in the upscale segment of the wood residential market. The Company offers a diversified product line supported by an overseas sourcing model and markets its brands through the wholesale trade’s network of brick-and-mortar furniture retailers, online retailers and interior designers worldwide, as well as through direct sales to the consumer online. The Company’s common stock is traded on the NASDAQ stock market under the symbol STLY.