Court Approves $32.9 Million in Financing for River Oaks; BNY Financial to Provide Financial Assistance for Restructuring

Furniture World Magazine

River Oaks Furniture, Inc. (OTC: "OAKSE"), a designer and manufacturer of upholstered furniture primarily to large furniture chains, said today that it has received final Court approval of up to $32.9 million in debtor-in-possession (DIP) financing. BNY Financial Corporation will provide the financing, which the Company says will give it the resources it needs to complete its restructuring and successfully emerge from Chapter 11, as early as the end of this year. Additionally, the Company announced a major new commitment to improved customer service, specifically in the areas of product quality, delivery and reliability. According to Richard Redden, interim chief executive officer of River Oaks, "The new financing is a vote of confidence by the financial community that will permit us to resume competitive purchasing of goods for the benefit of our retail customers. Moreover, this added support will enable the Company to return to historic levels of customer service and reliable on-time delivery, which suffered as a result of the Company's recent difficulties. "Our focus in the coming weeks will be to revitalize and reorganize the business by streamlining operations, reducing operating costs and enhancing operating efficiency. In this way we will be able to continue to build value in the business, reliably meet the substantial demand for our products, and strengthen customer relationships by enhancing service levels." Mr. Redden said that sales and management representatives will be meeting with customers and taking orders beginning for the new buying season Saturday, April 18, at its showroom at the week-long High Point, North Carolina, market. Mr. Redden said that River Oaks' daily operations continue uninterrupted. "Employees continue to be paid, and benefits remain in place. Customer orders will be filled promptly, and we have been in constant contact with our suppliers and are confident that they will work with us going forward," he said, adding that River Oaks expects to be hiring additional workers at its ongoing manufacturing facilities in order to fulfill escalating manufacturing schedules. River Oaks reported sales of approximately $120 million in 1997. Its founders, Stephen L. Simons, chairman, and John D. Nail, president, remain active in the Company, which for many years was one of the fastest growing furniture manufacturers in the country. More recently, the Company -- which was founded in 1987 -- has been burdened with liquidity problems, primarily as a result of the 1995 restatement of its financial statements and declining profit margins in its 1997 and first quarter 1998 fiscal business. Mr. Simons had said previously that he believed that the Chapter 11 process provides the Company with the flexibility to reorganize its operations and to protect the interests of its customers, suppliers and employees. "With this reorganization," Mr. Simons said earlier, "we believe we have the opportunity to return the Company to profitability." River Oaks filed a voluntary petition under Chapter 11 of the Bankruptcy Code March 3, 1998. It has since retained OSNOS & Company, a New York- and Charlotte, N.C.-based turnaround and corporate renewal consulting firm, to assist it in its restructuring. Richard Redden and Len York of OSNOS & Company have been named interim chief executive officer and chief financial officer, respectively, of River Oaks. River Oaks employs 1,000 in its headquarters here and in manufacturing facilities in Baldwin and New Albany, Mississippi, and Compton, California. This release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties which are described in the Company's filings with the Securities and Exchange Commission.