Oriental Trading Files for Bankruptcy
GDA Staff -- Gifts and Dec, 8/26/2010 2:36:18 PM
Omaha, NE — Home décor and novelty vendor Oriental Trading filed for Chapter 11 bankruptcy protection in Wilmington, Delaware.
The company's and its four affiliates' assets totalled $463 million for the fiscal year ended April 3. Net sales were $485.4 million. Oriental Trading's debt load, which totaled $756.6 million, will drop by more than 70 percent to $200 million.
The company missed an interest payment on its debt in May. Early last year, Oriental Trading negotiated waivers on the terms of some of its loans with the banks, which were due to expire in mid-August. The company began exploring restructuring alternatives in July.
According to Bloomberg, Oriental Trading said in a statement that a "substantial majority" of first-lien lenders are in agreement with the proposed plan. Second-lien lenders are not parties to the agreement.
Under the agreement, first-lien lenders, owed $403.6 million, would wind up with new stock and a new $200 million second-lien note. The first-lien lenders are agreeing to provide a secured $40 million credit. Upon confirmation of the plan, there would be a $50 million first- lien term loan to pay off the loan.
JPMorgan Chase Bank is agent for the first-lien creditors, while Wilmington Trust FSB is agent on the second-lien credit and Wachovia Bank is agent for mezzanine-debt holders. However Wilmington Trust clarified that it is not a lender to the company; it is only serving as an agent for holders of about $271.5 million of Oriental Trading's debt, for which it receives a fee. According to BusinessWeek, other creditors owed trade debt include Google, UPS and Federal Express, among others.
Oriental mails 300 million catalogs a year, selling more than 30,000 products to both consumers and businesses. Half of its sales are made online. The company employs more than 3,000 people and plans no layoffs.
The Man Behind the Company
The company has a colorful history: According to Omaha.com, The business was started by Harry Watanabe, who emigrated from Japan to the United States in 1920. In 1932, he bought a gift shop in Omaha, starting Oriental Trading Co., and later imported novelty merchandise. The founder passed away in 1988, and his son Terry Watanabe, inherited the business, which he had operated since he was 20 years old, in 1977.
Terry sold the company in 2000 to private equity group Brentwood Associates, which still owns about 24 percent of the equity. At the time, annual sales topped $300 million a year. (A unit of private-equity firm Carlyle Group bought a 68 percent stake in the company in 2006 for $1 billion. Management of OTC owns the remaining 8 percent.)
However the proceeds from the sale were not an unmixed blessing for Watanabe: he gambled away $189 million in a single year at two of Harrah's Las Vegas casinos. His total losses over a two-year period hit $200 million, according to his attorney. Harrah's told prosecutors that Watanabe skipped out on $14.7 million in markers in 2007. Prosecutors charged Watanabe with felonies for signing more than 30 counter checks agreeing to drafts from his bank account. Watanabe alleged that Harrah's allowed him to gamble while intoxicated and supplied prescription pills and vodka. A criminal indictment was dismissed in July after he agreed to enter into arbitration with Harrah's.
-
Gracious Home Files for Bankruptcy
Aug 17, 2010 -
CIT Group Seeks Debt Swap to Restructure
Oct 1, 2009 -
Fortunoff Goes Chapter 11
Feb 5, 2009 -
Lillian Vernon May Seek Sale or Liquidation
Feb 20, 2008
Featured Company
-
Brandwise Inc.
Brandwise serves a model - not just an industry - by integrating, automating, and optimizing the entire sales channel, from wholesale Suppliers to their Reps and the Retailers they service. In short, our software helps Reps and Suppliers sell more and create... more
VIEW ALL GALLERIES
