Berkline/BenchCraft Holdings, Inc., a leading U.S. supplier of upholstered motion and stationary furniture, announced that it has reached an agreement with certain of its stakeholders to recapitalize the company. The recapitalization will provide for an exchange of approximately $40 million of outstanding debt for new equity securities, as well as provide for $40 million of new financing for the company. In addition, the company will issue through a private placement a majority of its equity securities to a leading private equity firm. The new capital will be used to support the company's operational reorganization initiated in June 2006 and to fund Berkline's ongoing product innovation and expansion.
"We have made significant progress in the realignment of our business over the past nine months," said C. William Wittenberg, president and CEO. "This agreement reflects our stakeholders' confidence in our ability to not only remain competitive in our market segment, but also to position ourselves for continued profitable growth. This new financing solidifies Berkline's status as a premier manufacturer of upholstered furniture in North America."
As a result of its significant efforts in the last nine months, the company achieved the following:
- Closed or consolidated operations at four manufacturing plants.
- Streamlined costs through more efficient sourcing and use of off-shore operations.
- Rationalized the company's product offering.
- Integrated the company's manufacturing facilities and systems.
- Added key senior executive talent to the company's management team.
- Reduced significant fixed costs.
Mr. Wittenberg said these initiatives have reduced costs significantly, and the company plans to implement more initiatives in the upcoming months that are projected to result in substantial added savings and performance improvement throughout the organization.
"We are now poised to take Berkline to a new level. We will continue our efforts to successfully execute the numerous initiatives at hand and intend to be more aggressive in our pursuit of the market place," Mr. Wittenberg said.
The recapitalization plan is subject to certain approvals and conditions, including the execution of definitive documentation.
About the Company: Berkline/Benchcraft Holdings, Inc. is one of the largest independent suppliers of upholstered furniture in North America. The Company is the leading manufacturer of upholstered motion furniture (sofas, love seats and sectionals that recline), one of the three largest manufacturers of reclining chairs (recliners) and a major manufacturer and marketer of upholstered stationary furniture. Berkline/Benchcraft Holdings, Inc. employs approximately 3,200 people in its manufacturing facilities in Morristown, Lenoir City and Livingston, Tennessee and Blue Mountain, Mississippi. It also maintains facilities in Toronto and Ville D'Anjou, Canada and sourcing operations in Hangzou and Dong Guam, China. The company was formed in 2002 through the combination of the Berkline Corporation (founded in 1937) and Benchcraft (founded in 1976).
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