HG Holdings, Inc. Announces 2017 Results

Furniture World News Desk on 3/29/2018

HG Holdings, Inc. (formerly Stanley Furniture Company, Inc.) (OTCQB:STLY) recently reported sales and operating results for the year ending December 31, 2017.

2017 financial results compared to 2016:

• Net sales were $45.2 million compared to $44.6 million
• Gross profit was $4.8 million compared to $8.4 million
• Selling, general and administrative expenses were $13.0 million compared to $14.0 million
• Net loss was $7.7 million compared to net loss of $5.3 million, including $0.4 million and $1.1 million in CDSOA proceeds in 2017 and 2016, respectively.

On March 2, 2018, the Company sold substantially all of its assets to Churchill Downs LLC (“Buyer”), pursuant to the terms of the Asset Purchase Agreement, dated as of November 20, 2017, as amended by the First Amendment thereto dated January 22, 2018. As consideration for the asset sale, Buyer paid a purchase price consisting of cash in the amount of approximately $10.8 million (of which approximately $1.3 million was used to pay the outstanding amount under the Company’s credit agreement), a subordinated promissory note in the principal amount of approximately $7.4 million, and a 5% equity interest in Buyer’s post-closing ultimate parent company, Churchill Downs Holdings Ltd., a British Virgin Islands business company. Buyer also assumed substantially all of the Company’s liabilities.

The Company anticipates that its expenses relating to the asset sale following the closing of the asset sale will be approximately $2.8 million, which includes financial advisory fees, legal fees, amounts owed under a change in control protection agreement with its principal financial officer, amounts owed to its former chief executive officer under the terms of his separation agreement, and other fees and expenses.

As previously announced, the Company does not intend to liquidate following the closing of the asset sale. The Company also previously indicated its board of directors would evaluate alternatives for use of the cash consideration, which were expected to include using a portion of the cash to either repurchase 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. The Company announced its board has determined not to pay a special dividend, but to use the existing authorization for stock repurchases to repurchase the Company’s common stock from time to time in the open market, in privately negotiated transactions, or otherwise, at prices the Company deems appropriate. The Company also announced its board anticipates retaining the remaining cash for use in acquiring non-furniture related assets and to fund operating expenses until an acquisition. The Company also indicated its board is considering a rights offering of the Company’s common stock to existing shareholders to raise additional cash for acquisition purposes which could provide the Company greater resources and flexibility in acquiring non-furniture assets.

More about HG Holdings, Inc: HG Holdings, Inc., formerly operated as a leading design, marketing and overseas sourcing resource in the upscale segment of the wood residential furniture market. The Company’s common stock is traded on the OTCQB marketplace under the symbol STLY.