Furniture Brands' sale moving too fast, shareholder Broadbill says

Delaying sale also could save pension fund
Nov. 20, 2013 @ 08:58 AM

Sticking to the accelerated sale of Furniture Brands International’s assets could destroy “hundreds of millions of dollars” in value, including unnecessary pension termination costs, one of the company’s major shareholders said in a court filing.

Under the schedule that the U.S. Bankruptcy Court approved Nov. 6, today is the deadline for bids on Furniture Brands’ assets, with a hearing set for Thursday and closing on the deal set for Friday.

When Furniture Brands filed for bankruptcy protection in September, the closing originally was set for Jan. 8. That later was moved to Dec. 12.

“This constantly shifting sale process is unprecedented and may well have misled buyers and frustrated expectations of the parties – all to the benefit if the incumbent bidder,” said an objection filed Monday by Broadbill Investment Partners, which owns 4.7 percent of Furniture Brands’ stock.

Broadbill’s filing suggests that the only purpose of such a rapid acceleration of the sale process would be to prevent anyone else from having the time to pull together a bid to top the existing $280 million offer by KPS Capital Partners -- in particular, it could stop other furniture companies, “who could reduce corporate overhead and supply new management.”

Broadbill’s filing points out that Furniture Brands’ request for a faster sale was filed just four days after Samson Holdings Ltd., a case goods manufacturer based in Taiwan, had said it planned to submit a higher bid than KPS’s by the Dec. 5 deadline for bids.

“Apparently, the Debtors shortened the sale process with no advance notice to interested bidders other than KPS,” the filing said.

Samson tried to buy Furniture Brands in 2007 but was rebuffed by management.

Furthermore, under KPS’s plan it appears likely that the employee pension plan will be terminated and its obligations turned over to the federal Pension Benefit Guaranty Corp., at significant cost to the company, but there are cost-effective alternatives that could save the pension plan, the filing said.

“Considering these alternatives requires more time than simply accepting the existing bid structure adopted by KPS,” the filing said.