Stanley Furniture Announces Preliminary Fourth Quarter Sales and Net Loss; Amendment to Agreement to Sell Substantially All o...
23 Janeiro 2018 - 12:12PM
Stanley Furniture Company, Inc. (Nasdaq:STLY) announced today that
it expects to report net sales for the fourth quarter of 2017 of
approximately $11.9 million and a fourth quarter net loss of
approximately $6.7 million, which includes receipt of $433,000 in
CDSOA proceeds. Most of the fourth quarter net loss was
attributable to non-recurring charges including approximately $3.3
million in charges for obsolete and slow-moving inventory,
approximately $1.7 million in charges relating to the departure of
the company’s former chief executive offer and two directors during
the quarter (including approximately $0.5 million of non-cash
accrued expense pursuant to the terms of the former chief executive
officer’s separation agreement and approximately $0.9
million in non-cash charges associated with the vesting of
restricted stock held by the former chief executive officer and
directors) and approximately $0.8 million of transaction expenses
in connection with the proposed sale of substantially all of the
Company’s assets.
In addition, the Company announced today that it has entered
into an amendment to its previously announced agreement to sell
substantially all of its assets to Churchill Downs LLC (“Buyer”)
providing for a revised purchase price consisting of a combination
of cash and a subordinated promissory note aggregating $18.4
million, as well as a 5% equity interest in Buyer’s post-closing
ultimate parent company. The cash portion of the revised
purchase price will be at least $7 million, consisting of $3.5
million pursuant to Buyer’s equity financing agreements and the
proceeds available at closing under Buyer’s loan agreement with
North Mill Capital LLC to fund the cash portion of the purchase
price. The principal amount of the subordinated promissory
note of Buyer will be the difference between $18.4 million and the
cash paid by Buyer at closing. The amended agreement
continues to provide for Buyer to assume substantially all the
Company’s liabilities. Under the amendment, the Company will
retain certain assets, including cash in an amount of at least $0.6
million, net operating loss carryforwards, and any remaining
payments under the Continued Dumping and Subsidy Offset Act. As
previously disclosed, 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. In connection with
the amendment, Walter Blocker agreed to provide an additional
$500,000 in equity financing to fund a portion of the cash purchase
price.
In addition to the revised purchase price, the amendment
announced today provides the Company with a go-shop period during
which it will actively solicit alternative proposals from third
parties for the next 14 days concluding at 11:59 p.m. on February
5, 2018 and permitting the Company to continue discussions for an
additional 16 days with any party submitting a proposal by that
time if the Company’s board of directors determines that proposal
could reasonably be expected to lead to a superior proposal (as
defined in the agreement) without financing conditions. The
amendment also provides for the Company to pay a termination fee of
$375,000, rather than $750,000, if it terminates the agreement in
connection with a proposal the Company’s board of directors
determines to be a superior proposal during the go-shop period.
There can be no assurance that this process will result in a
superior proposal. The Company does not intend to disclose
developments with respect to the solicitation process unless and
until its board of directors has made a decision with respect to
terminating the agreement or changing its recommendation in
connection with a superior proposal.
The closing of the asset sale, which is subject to approval by
the Company’s stockholders, Buyer closing on financing pursuant to
its existing financing agreements with North Mill Capital LLC,
Endurance Capital Group and Walter Blocker, and other customary
closing conditions, is still expected to occur in the first quarter
of 2018.
Upon the signing of the agreement in November 2017, Buyer
delivered into escrow a $750,000 deposit towards the cash
consideration for the sale. If Buyer is unable to close on
its financing or the agreement is terminated for certain other
reasons, the Company is entitled to receive the deposit as a
termination fee.
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 substantial
net operating loss carryforwards. The Company anticipates
transaction costs including professional fees and change in control
payments to be approximately $2.5 million.
About the CompanyEstablished 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.
Forward-Looking
StatementsCertain statements made in this news release are
not based on historical facts, but are forward-looking statements.
These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “may,”
“will,” “should,” “could,” or “anticipates,” or the negative
thereof or other variations thereon or comparable terminology.
These statements reflect our reasonable judgment with respect to
future events and are subject to risks and uncertainties that could
cause actual results or outcomes to differ materially from those in
the forward-looking statements. Such risks and uncertainties
include that the Company’s year-end audit has not been finalized
and final net sales and net loss may differ from the expected
amounts above, the occurrence of any event, change or other
circumstance that could give rise to the termination of the asset
purchase agreement, an inability to complete the proposed
transaction due to a failure to obtain the approval of the
Company’s stockholders or a failure by Buyer to obtain sufficient
financing to fund the cash consideration, the occurrence of events
that negatively impact the Company’s liquidity in such a way as to
limit or eliminate the Company’s ability to use proceeds from the
transaction to fund a repurchase program or pay a special dividend,
or an inability on the part of the Company to identify a suitable
business to acquire or develop with the proceeds of the
transaction, as well as the other risks and uncertainties
identified in filings by the Company with the Securities and
Exchange Commission (“SEC”), including its periodic reports on Form
10-K and Form 10-Q. Any forward-looking statement speaks only
as of the date of this news release and the Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new developments or otherwise.
Additional Information and Where to Find
It In connection with the proposed transaction, the
Company has filed a preliminary proxy statement, and intends to
file a revised preliminary proxy statement, with the SEC and
intends to file with the SEC and furnish to the Company’s
stockholders a definitive proxy statement and other relevant
documents pertaining to the proposed transaction.
Stockholders of the Company are urged to read the definitive proxy
statement and other relevant documents carefully and in their
entirety when they become available because they will contain
important information about the proposed transaction.
Stockholders of the Company may obtain the proxy statement and
other relevant documents filed with the SEC (once they are
available) free of charge at the SEC’s website at www.sec.gov or by
directing a request to Stanley Furniture Company, Inc., 200 North
Hamilton Street, No. 200, High Point, North Carolina 27260, Attn:
Anita W. Wimmer.
Participants in the
SolicitationThe directors, executive officers and certain
other members of management and employees of the Company may be
deemed “participants” in the solicitation of proxies from
stockholders of the Company in favor of the proposed transaction.
Information regarding the persons who may, under the rules of the
SEC, be considered participants in the solicitation of the
stockholders of the Company in connection with the proposed
transaction will be set forth in the proxy statement and the other
relevant documents to be filed by the Company with the SEC. You can
find information about the Company’s executive officers and
directors in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, as amended, and in its definitive proxy
statement filed with the SEC on Schedule 14A on April 13, 2017.
Investor Contact: Anita W.
Wimmer(336) 884-7698
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