Oriental Trading Co. Inc., the direct marketer of home décor products, toys, and novelties, filed for bankruptcy protection to restructure its debt.
Consolidated assets of the Omaha, Nebraska-based company and its four affiliates were $463 million for fiscal year ended April 3, it said. Liabilities totaled $756.6 million, and net sales were $485.4 million, according to court papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Four affiliates also sought protection.
The companies have “experienced and continue to experience financial difficulties due primarily to a severe economic downturn that has adversely affected retail markets and consumer confidence,” Steven Mendlik, chief financial officer of Oriental Trading, said in court papers.
Oriental Trading said in a statement that a “substantial majority” of first-lien lenders are in agreement with the proposed plan which is outlined in a so-called plan support agreement. Second-lien lenders are not parties to the agreement.
Under the agreement, first-lien lenders, owed $403.6 million, would wind up with new stock and a new $200 million second-lien note. The first-lien lenders are agreeing to provide a secured $40 million credit for the Chapter 11 case. Upon confirmation of the plan, there would be a $50 million first- lien term loan to pay off the loan.
JPMorgan Chase Bank NA is agent for the first-lien creditors, and Wilmington Trust FSB is agent on the second-lien credit. Wachovia Bank NA is agent for mezzanine-debt holders.
A unit of private-equity firm Carlyle Group bought a 68 percent stake in Oriental Trading Co. in 2006.
Founded in 1932, privately held Oriental mails 300 million catalogs a year and generates half of its sales online. Brentwood Associates bought Oriental in 2000 and owns about 24 percent of the equity. Management of OTC owns the remaining 8 percent, according to court papers.
The main case is In re OTC Holdings Corp., 10-12636, U.S. Bankruptcy Court, District of Delaware (Wilmington).