hhgregg, Inc. announced that the company has taken action to restructure its balance sheet and better position itself for future success by filing voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code.
The petitions were filed in the U.S. Bankruptcy Court for the Southern District of Indiana. The restructuring is intended to facilitate the company's long-term, strategic goals of enhancing profitability and reaffirming its commitment to its associates, vendors and the communities it serves.
"We've given it a valiant effort over the past 12 months," said Robert J. Riesbeck, hhgregg's President and CEO. "We have conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path forward to ensure hhgregg's long-term success. We are thankful for the continued support of our dedicated employees, valued customers, vendors and business partners as we navigate this process, and look forward to becoming a stronger company in the coming months."
The company has obtained a committed $80 million debtor-in-possession (DIP) financing facility underwritten by Wells Fargo Bank, National Association and GACP Finance Co., LLC. Subject to Court approval, this DIP financing, combined with the acquiring party's investment and the Company's cash from operations, is expected to provide sufficient liquidity during the Chapter 11 case to support its continuing normal business operations and minimize disruption.
The company has signed a term sheet with an anonymous party to purchase the assets of the Company, which is intended to allow the company to exit Chapter 11 debt free with significant improvement in liquidity for the future stability of the business. The company expects a quick and smooth process through Chapter 11 with emergence in approximately 60 days.
"We have streamlined our store footprint and remain fully committed to the 132 remaining stores, and the associates supporting those locations. We have solidified our senior management team and everyone is dedicated to restructuring our business model for future profitability and growth," continued Riesbeck. "Through these strategic steps, we plan to come out of this debt free and more agile as we serve our valued customers and vendor partners, and continue to be a dominant force in appliances, electronics and home furnishings."
hhgregg's 132 store locations will operate in the ordinary course of business throughout the restructuring process. The 88 stores affected by the company's announcement on March 3, 2017 will continue to operate as previously disclosed in the coming weeks.
Morgan, Lewis and Bockius LLP and Ice Miller are serving as hhgregg's legal advisors in the restructuring and Stifel, Nicolaus & Company, Incorporated, Miller Buckfire & Co., and Berkeley Research Group, LLC are serving as financial and restructuring advisors.