Daily News: June 17, 2013

Orchard Supply Files Chapter 11, Lowe’s Bids for Assets

Lowe’s Companies, the world’s second largest home improvement retailer, announced it has entered into an asset purchase agreement with Orchard Supply Hardware, under which Lowe’s will acquire the majority of Orchard’s assets for approximately $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s supplier partners.

The transaction is expected to be consummated through a court-supervised process under Section 363 of the U.S. Bankruptcy Code and is subject to an auction and Bankruptcy Court approval. The agreement with Lowe’s will serve as the “stalking-horse bid” in the auction process. Earlier, Orchard filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.

Subject to the auction process, court approval and customary regulatory review, the parties anticipate the transaction will close in approximately 90 days. Under the terms of the agreement, Lowe’s would receive a break-up fee of 3% of the purchase price should it not be successful in acquiring the Orchard assets. In addition, subject to court approval, for an alternative bidder to be successful, it must outbid Lowe’s by a minimum of $12 million, representing $5 million in addition to the break-up fee and an expense reimbursement of $850,000.

Goldman Sachs is acting as financial advisor to Lowe’s, while Hunton & Williams is acting as legal advisor.

Previously on abfjournal.com:

Term Loan Lenders Extend Orchard Supply’s Agreement Date, Monday, April 29, 2013