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Hancock Exits Bankruptcy
Posted by: BillGardner | August 5, 2008
Hancock Fabrics issued a statement today dated August 1 that it has emerged from Chapter 11 bankruptcy protection after successfully restructuring its business operations and satisfying the conditions to effectiveness set forth in the Plan of Reorganization confirmed by the U.S. Bankruptcy Court for the District of Delaware on July 22.
In conjunction with the plan, Hancock Fabrics has successfully closed a $100 million exit financing facility provided by GE Commercial Finance Corporate lending and has issued $20 million of secured notes and warrants in connection with a rights offering to certain of its shareholders.
Jane Aggers, president and ceo, said, “This is a huge milestone and a very happy day for Hancock Fabrics and all of our associates, customers, business partners, and shareholders. We are extremely pleased to have confirmed a Plan of Reorganization that provides for the payment in full of all of our creditors.
“Through this restructuring process we have effectively addressed our real estate portfolio, as well as financial and operational challenges, creating a strong foundation for the future success of Hancock Fabrics. The company now has a stronger balance sheet, cash to fund operations, and a streamlined store portfolio that will allow us to compete successfully in our industry. The rapid and successful restructuring of Hancock Fabrics is a testament to our outstanding associates, supportive suppliers, and professional partners, and we appreciate their hard work and dedication throughout this process.”
Plan highlights include payment in full of all creditors of the company holding valid claims, including interest, as applicable, as well as for pre-petition equity holders to retain their interest in the company.
In conjunction with the Chapter 11 filing, Hancock instituted significant operational restructuring initiatives over the last 16 months, including designing and implementing a new store prototype, completing 57 store remodels, with a format that “significantly enhances the customer experience and improves in-store operating efficiencies.”
The company also improved its infrastructure in financial reporting and compliance, as well as through the upgrade of technology and the centralization of merchandising, marketing, inventory management, and distribution functions.
The company also launched a new Web site (www.hancockfabrics.com) which now provides a platform to increase data-driven marketing and advertising programs while also expanding the online product offering by 50,000 new products.
In addition, Hancock says it strengthened its management team with specialty retail operations, merchandising, marketing, and corporate finance expertise.
Effective immediately, the new board of directors for Hancock Fabrics: Jane Aggers; Carl Berg, chairman of the board and ceo of Mission West Properties; Sam Pina Cortez, principal of KCL Development LLC; Steven Scheiwe, president of Ontrac Advisors; and Harry Schulman, operating partner with Baird Capital Partners.
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