Columbus, Ohio — Big Lots, a top 50 retailer, filed for Chapter 11 protection on September 9 in the U.S. Bankruptcy Court for the District of Delaware.
Simultaneously, the discount store located in Columbus, Ohio, declared that it had signed a sale agreement with a subsidiary of Nexus Capital Management, whereby Nexus committed to purchasing all of the company’s assets and continuing business activities.
Bruce Thorn, president and CEO of Big Lots, said in a statement announcing the sales agreement, “We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts.” “By taking these steps today, we will be able to move forward with new owners who have faith in our company and can provide stability in our finances, all the while optimizing our operational footprint, accelerating performance improvements, and fulfilling our promise to be the leader in extreme value.”
Big Lots disclosed in the statement that it has estimated assets ranging from $1,000,000,001 to $10 billion, and estimated liabilities ranging from $1,000,000,001 to $10 billion, with an estimated 5,001 to 10,000 creditors.
Big Lots stated in the sale announcement release that although it has accelerated its strategic initiatives aimed at enhancing sales and boosting its long-term performance and profitability since the pandemic, it has been negatively impacted by recent macroeconomic factors like high interest rates and inflation. Big Lots has had special difficulties as a result of the current economic trends, since its main consumers have reduced their discretionary spending on seasonal and household goods, which account for a sizeable amount of the company’s sales.
Despite stating that the company’s overall performance has been improving, Big Lots’ board of directors decided that the best course of action to optimize value and guarantee ongoing operations is to enter into a sale agreement with Nexus and start a court-supervised sale process.
In accordance with section 363 of the U.S. Bankruptcy Code, Nexus will act as the stalking horse bidder in an auction process overseen by the court as per the terms of the sale agreement. Therefore, the proposed deal is contingent upon court permission, better or higher offers, and other factors. As per the terms of the agreement, the parties plan to close the deal in the fourth quarter of 2024, assuming Nexus is declared the successful bidder.
Managing director of Nexus Evan Glucoft stated, “We are thrilled to have the chance to work with Big Lots and help restore this iconic brand to its status as America’s leading extreme value retailer.” “The Big Lots company has a lot of potential, and we think its best days are still ahead.”
Big Lots has obtained commitments for $707.5 million in financing as part of the court-supervised process. This includes $35 million in new financing from some of its present lenders. The funding will take the form of a post-petition credit facility (referred to as the “DIP Financing Facility”). It is anticipated that the DIP Financing Facility, when approved by the court, together with the cash generated by the business’s continuing operations will offer the company enough liquidity to support it as it works to close the selling transaction.
The company is continuing to evaluate its operational footprint as part of the sale process, which will involve closing further store locations. Additionally, Big Lots will keep assessing and refining its distribution center concept. Its decision to close its Columbus, Ohio, distribution center was made public earlier this month.
“We plan to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers, even though the majority of our store locations are profitable,” Thorn stated. “We plan to use the resources provided by this process to continue systematically optimizing our store fleet in order to achieve this.”
