Report says Merrimack's Brookstone considering bankruptcy
MERRIMACK — One year after Brookstone Inc. laid off nearly a quarter of its local employees, the retailer of innovative gadgets and specialty items is considering filing for bankruptcy.
According to the Wall Street Journal, Brookstone may file for bankruptcy protection in the coming weeks, as it speaks with at least two firms about buying or investing in the company.
The Journal reported Friday that Brookstone has about $200 million in debt, and reportedly missed an interest payment of about $125 million in January.
The possible bankruptcy comes after repeated changes for the Merrimack-based company housed at 1 Innovation Way. In early 2013, Brookstone laid off about 71 employees from its Merrimack site, which represented about 23 percent of the local workforce.
The company, founded in 1965, released a statement to the New Hampshire Union Leader on Friday that said it is “in active discussions with its ad hoc bondholder group and senior lender with respect to refinancing and/or restructuring its bond and other debt, and improving its capital structure.”
Brookstone said it is considering new investors and has retained Jefferies LLC, K&L Gates, and Deloitte CRG to assist in the process. But it has yet to secure an agreement with any potential investors and has not determined if it will enter a court-supervisored restructuring, the company said.
“During these discussions, our valued customers and employees can be assured that Brookstone will remain open for business in 250+ malls and airports,” Brookstone CEO Jim Speltz said in a statement. “Our goal is to reduce our debt and bring our operations better in line with today’s marketplace.”
Brookstone operates four stores in New Hampshire: in Manchester, Salem, Nashua and North Conway. Its corporate headquarters in Merrimack employs about 200 people, including a product development laboratory, the company said.
In 2012, the former president and chief executive officer of the company, Ron Boire, announced his resignation from Brookstone.
According to the Journal, the local gadget store is in discussions with Hilco Global and Tiger Capital Group LLC, but nothing official has been determined while all of the company’s options are being considered.
One year ago, a Brookstone spokesperson told the New Hampshire Union Leader that a restructuring plan was being implemented, designed to reposition the company for continued growth and success.
According to the company’s third quarter report for 2013, consolidated net sales decreased 6.5 percent to $268.3 million and comparable-store sales decreased 3.6 percent. In addition, Brookstone had “cash borrowings outstanding under its senior credit facility of $65.4 million,” said the report, adding cash on-hand at the end of the third quarter in 2013 was about $1.1 million compared to $1.3 million in the same quarter in 2012.
“The investments we made in our sales team have yielded exciting gains in productivity. We are encouraged by the positive trend we experienced in our comp sales in the quarter, reversing the negative trend of the second quarter,” Speltz said in the news release issued last November.