Energizer Wins Bankruptcy Court Permission to Bid on American Safety Razor
Energizer Holdings Inc., known for its battery powered pink bunny and Schick shavers, won court permission to bid for bankrupt competitor American Safety Razor Co. as a judge rejected the outcome of an earlier auction.
U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, ruled today that American Safety, which makes surgical blades and discount shavers, must hold a new auction for its assets.
Walrath threw out the results of the first auction, won by American Safety lenders who agreed to cancel their $244 million claim in exchange for control of the company. Only lenders were allowed to bid in the first auction.
“If there’s more than one bid, the debtors must hold an auction,” Walrath said. “The process has not been fair.”
Andrew Torgove, American Safety’s financial adviser, testified Sept. 28 that the Cedar Knolls, New Jersey-based company rejected a $301 million cash offer from St. Louis-based Energizer before the first auction began. The bid raised too many antitrust issues, said Torgove.
Energizer, which also makes batteries and is known for advertising with a pink bunny that “keeps going ... and going,” is the world’s second-biggest wet-shave razor seller, behind Procter & Gamble Co.’s Gillette.
‘Show-Me-The-Money’
“This is a show-me-the-money case and Energizer has showed them the money,” Robert Stark, an attorney for lower-ranking creditors, told Walrath.
Lawyers for Energizer and American Safety wouldn’t comment after the decision, read in open court.
Walrath said one of the “problematic” aspects of the earlier sale process involved a non-refundable deposit. Energizer offered to give American Safety a $5 million deposit, while American Safety demanded $35 million.
“Deposits are normally refundable,” Walrath told the company’s lawyers.
She also said she was bothered by the suggestion that senior lien holders might get the deposit, when the money should go to the bankruptcy estate.
“There are criminal sanctions” if the process involves “improper motives,” Walrath said, adding that she hasn’t identified any wrongdoing in the case.
Walrath said Energizer will need “a business week” to go through financial documents and evaluate the company’s worth before making a firm offer.
‘Hold an Auction’
“Then we’ll hold an auction,” she said.
American Safety filed for bankruptcy protection in July with plans to sell itself to lenders.
American Safety blamed its bankruptcy on increased competition for inexpensive shavers and the loss of its biggest customer, Wal-Mart Inc.
Second-lien lenders lead by BlackRock Kelso Capital Corp. claimed executives mismanaged the company and are fighting any competing bids in order to save their own jobs.
BlackRock and GSO/Blackstone Debt Funds Management LLC hold about 28 percent of American Safety’s $178 million in second lien debt. Those groups support Energizer’s bid.
American Safety was acquired for $658 million in cash and debt in 2006 by London-based Lion Capital LLP, the company said in court papers.
American Safety was founded in 1875 and manufactured the first safety razor for shaving in the U.S. It was a public company from 1993 until 1999, when it was bought by private equity firm J.W. Childs Associates, L.P.
Shares of Energizer, with about $4 billion in sales for the fiscal year ending in September 2009, fell 16 cents to $67.27 in New York Stock Exchange composite trading at 3:12 p.m.
The bankruptcy case is In re American Safety Razor Co., 10- 12351, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporters on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net. Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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