EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Bluestem Brands, Inc. (Bluestem), along with its subsidiaries and affiliates, announced today that it has filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. This includes $125 million of post-petition financing and the support from a stalking horse bidder to acquire the company. Bluestem intends to use the reorganization process to implement a value-maximizing transaction that deleverages its balance sheet and positions the company for long-term success. Bluestem Brands, Inc. is a wholly owned subsidiary of Bluestem Group, Inc. (OTCMKTS: BGRP), which is not part of the Chapter 11 filing.
Bruce Cazenave, Bluestem's chief executive officer, said, “Bluestem has been aggressively taking steps to improve both the performance and financial strength of our various businesses and brands. While these strategies have gained positive momentum, they have not produced enough results yet to satisfy our debt obligations. We are using Chapter 11 to maximize the value of our business and have entered into a stalking horse purchase agreement with a syndicate of term-loan lenders, which provides us with a clear path to strengthen our business for continued success. The stalking horse bid is a baseline against which we will seek higher or otherwise better outcomes for the benefit of all of our stakeholders. Additionally, Bluestem has a strong foundation as a niche player, providing services and products to underserved consumers. We will emerge from Chapter 11 as a stronger company, with a clear brand focus and the opportunity to realize the full potential of the company.”
The company has also reached an agreement to obtain a $125 million debtor-in-possession loan from a syndicate of lenders, which is intended to provide Bluestem Brands with liquidity necessary to operate its business while it pursues a value-maximizing transaction through the Chapter 11 process. The new $125 million financing commitment further validates the initiatives the company is taking to better serve its customers, employees, vendors, and other stakeholders.
Bluestem filed a motion on March 8, 2020 to approve the selection of this syndicate as the stalking horse in its sale process. Interested parties will have an opportunity to submit higher or otherwise better offers through the court-supervised competitive bidding process. Bluestem has retained Raymond James as its investment banker to assist with the sale process.
Bluestem expects to continue serving customers through its ecommerce sites and catalogs as usual, with its call centers and distribution centers maintaining normal business operations throughout this process. The company is seeking court approval to:
- Honor all customer programs (including credit cards, customer warranties and gift cards);
- Continue employee wages and benefits without interruption; and
- Pay for goods and services provided to the company during the process.
Bluestem Brands has made customary filings with the court, including first-day motions, to help ensure an orderly transition into Chapter 11 while minimizing business disruption. The motions are expected to be addressed by the court soon.
Robert Warshauer, of Imperial Capital, is serving as Bluestem’s Chief Restructuring Officer. The company’s restructuring counsel is Kirkland & Ellis, its financial advisor is FTI Consulting and its investment banker is Raymond James.
Court filings and other documents related to the reorganization proceedings are available on a separate website administered by the company's claims agent, Prime Clerk, at (877) 429-7544, (646) 442-5966, https://cases.primeclerk.com/bluestem/ or https://www.deb.uscourts.gov//, the official Bankruptcy Court website.