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Brookstone Said to Hire Jefferies, K&L to Restructure Debt

Brookstone Co., known for gadgets including a $90 towel warmer, hired financial adviser Jefferies Group LLC and law firm K&L Gates LLP to help restructure its debt, two people with knowledge of the situation said.

A group of bondholders for the Merrimack, New Hampshire-based retailer has hired Alvarez & Marsal Inc. and Stroock & Stroock & Lavan LLP, according to the people, who asked not to be identified because the hirings aren’t public. Brookstone was taken private in 2005 by a Singapore-led consortium including Osim International Ltd. (OSIM) and state-owned Temasek Holdings Pte.

Brookstone had $125.6 million of senior notes outstanding at the end of September, according to company filings. Those notes, which mature in October of this year, bear interest at 13 percent with one of two semi-annual payments due yesterday. The company had just $1.1 million in cash, down from $32 million a year earlier.

Founded in 1965, Brookstone was acquired in 2005 by a group led by Osim, Asia’s biggest maker of massage chairs, in a $422 million deal. The group included Temasek Holdings and buyout firm JW Childs Associates LP. Osim sells its products through Brookstone stores.

“As part of the annual audit review and to be prudent, we will take a material charge by impairing the Brookstone senior preferred notes and recognizing foreign currency translation losses,” Osim said in a statement to the Singapore stock exchange today.

Paring Spending

Representatives for Brookstone didn’t respond to e-mail and voice messages seeking comment. Representatives for K&L Gates, Jefferies and Alvarez declined to comment. A representative at Stroock didn’t respond to requests for comment.

With more than 250 stores and a catalog business, Brookstone has struggled as consumers pare spending to essentials. Holiday sales in November and December increased at their slowest rate since 2009, according to Chicago researcher ShopperTrak. Brookstone in November reported a loss of $18.1 million in the third quarter, as sales declined 7.3 percent from a year earlier.

Competitor Sharper Image Corp. filed for bankruptcy in February 2008 and liquidated.

To contact the reporters on this story: Beth Jinks in New York at bjinks1@bloomberg.net; Lauren Coleman-Lochner in New York at llochner@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

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