Dive Brief:
- Big Lots has received interim court approval to immediately access $550 million of $707.5 million in available bankruptcy financing, according to court documents and a Wednesday company announcement. The company filed for Chapter 11 protection on Monday.
- The financing, along with cash generated from ongoing operations, is expected to provide enough liquidity to continue normal operations, including paying employees and vendors, as Big Lots works through the bankruptcy process.
- Big Lots remains open and said it plans to stay in business after exiting bankruptcy.
Dive Insight:
Big Lots has secured $550 million in debtor-in-possession financing and up to an additional $157.5 million in new term loans days after entering bankruptcy with a debt load of $556.1 million.
“With the court relief we have received today and the support of our lenders, we look forward to moving through this process and emerging as a stronger, more-efficient company, well-positioned to serve our customers,” CEO Bruce Thorn said in a Wednesday statement.
The retailer also entered bankruptcy with a stalking horse agreement with Nexus Capital Management. The investment firm is offering $620 million for most of Big Lots’ assets and business operations. If no higher or better offers are presented to the court, Nexus and Big Lots expect to close the deal during the fourth quarter of this year. Big Lots said it expects “to emerge from this sale process under new private ownership.”
The New York Stock Exchange also said Monday it had begun the process to delist the company and trading of the retailer’s shares was suspended. Big Lots’ stock listing is expected to be removed from the NYSE on Sept. 23. Although the company is required to periodically disclose some financial results while in Chapter 11, the company said it does not plan to issue earnings press releases or hold quarterly conference calls while in bankruptcy. The retailer was scheduled to release its Q2 earnings on Sept. 6 but postponed the announcement.
“In recent years, Big Lots has faced challenges due to record inflation and high interest rates post-pandemic, which have impacted consumer spending,” the company said in an open letter addressed to its business partners. The company said it expects to pay vendors in full for goods and services delivered after the bankruptcy filing.
“Nexus believes in our business and our potential, and with the financial stability they provide, we will improve our long-term performance and profitability,” the company said in its letter. Last month, the retailer amended its credit and loan terms to allow the closure of up to 315 stores. Big Lots also plans to use bankruptcy to further reduce its store fleet.
In Chapter 11, “Big Lots is hoping to avoid the path of retail chains 99 Cents Only Stores and furniture retailer Conn’s which have had to liquidate in bankruptcy,” Sarah Foss, global head of legal and restructuring at Debtwire, said in emailed comments. “Discount chains like Big Lots have faced a tough retail environment this year, with Lumber Liquidators, Bob’s Stores, Joann and The RoomPlace Furniture and Mattress also commencing Chapter 11 cases this year.”
