Stanley Furniture Announces Closing of Sale of Substantially All of Its Assets

Furniture World News Desk on 3/3/2018

Stanley Furniture Company, Inc.  recently announced that on March 2, 2018, its stockholders approved the previously announced sale of substantially all of its assets to Churchill Downs LLC, and the Company consummated the sale transaction pursuant to the terms of the asset purchase agreement dated November 20, 2017, as amended on January 22, 2018. The purchase price consisted of approximately $10.8 million in cash, a subordinated promissory note in the principal amount of approximately $7.4 million, and a 5% equity interest in Churchill Downs LLC’s post-closing ultimate parent company. The Churchill Downs LLC also assumed substantially all the Company’s liabilities. The Company retained certain assets, including cash of approximately $0.8 million (approximately $0.6 million of which is restricted cash), net operating loss carryforwards, and any remaining payments under the Continued Dumping and Subsidy Offset Act. The Company used cash proceeds from the asset sale of approximately $1.3 million to pay the outstanding balance under its credit agreement with Wells Fargo and estimates additional transaction costs for the asset sale of approximately $2.7 million. In connection with the asset sale and consistent with the terms of the asset purchase agreement, the Company is changing its name to HG Holdings, Inc.

As previously announced, 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 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 net operating loss carryforwards.

Steven A. Hale II, Chairman of the Board, stated, “We’re pleased to close this transaction and thank the many people who contributed to its successful completion. The Company will now be able to focus solely on evaluating alternatives for deploying its cash and potentially deriving a benefit from the Company’s net operating loss carryforwards. We look forward to this next chapter in the Company’s history.”

More about the Stanley Furniture Company: Stanley Furniture Company, Inc. formerly operated as a leading design, marketing and overseas sourcing resource in the upscale segment of the wood residential furniture market. After the sale of substantially all of its assets on March 2, 2018, the Company is changing its name to HG Holdings, Inc. and will evaluate alternatives for use of its cash.