As online competition rises and consumers spend less on non-essentials such as virtual keyboards and massage chairs, retailer Brookstone, Inc., has filed for bankruptcy to pursue a $147 million sale to novelty retailer Spencer Spirit Holdings Inc.
Continued Business Operations
Brookstone, taken private in 2005, will continue business operations with current employees and managers. The company, based in Merrimack, New Hampshire, said its bondholders support the sale. Spencer would pay $120 million in cash, $7.5 million in new notes, and assume about $18.5 million in liabilities.
“This agreement will leverage the brand recognition and resources of our two companies,” Chief Executive Officer of Brookstone, Jim Speltz said in the statement. “The retail industry continues to evolve and staying ahead of the curve is critical.”
Echoes of Sharper Image Corp.
In its filed Chapter 11 documents, Brookstone listed debt and assets of as much as $500 million. The company seems to have been plagued by the same afflictions that sank Sharper Image Corp. in 2008.“Sharper Image and Brookstone were places that you went to for unique products. Now you can find it on the Web,” said Robert A. Del Genio, managing member at turnaround and restructuring firm CDG Group LLC, which managed Sharper Image in its bankruptcy.
Financial adviser Jefferies Group LLC and law firm K&L Gates LLP are helping Brookstone restructure its debt. According to court documents, the 30 largest unsecured creditors are owed about $4.7 million. Tempur-Pedic Inc. is the biggest creditor, with a claim of $961,815.
Brookstone started as a catalog business in 1965. It offered “hard-to-find tools” before opening its first store in 1973 in Peterborough, New Hampshire.
“Brookstone is a well established iconic brand that has stood the test of time,” said Spencer Chief Executive Officer Steven Silverstein.
Spencer operates 644 novelty and pop-culture gift stores in the U.S. and Canada. Additionally, it runs more than 1,000 seasonal Halloween stores under the Spirit brand.