Generations Brands emerges from bankruptcy with $20 million investment

By Caroline Salls

Pittsburgh, Jan. 26 - Generation Brands has successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, eliminating more than $150 million of debt from its balance sheet, according to a company news release.

In conjunction with its emergence, Generation Brands has received a new $20 million equity investment from an affiliate of principal stockholder Quad-C Management, Inc.

With this new investment, the company said it has roughly $40 million in liquidity and no debt maturities until 2014.

"Just 53 days after filing for Chapter 11, we were able to significantly de-lever the company's balance sheet, ensure more than sufficient liquidity to support our working capital needs and emerge from Chapter 11 with the flexibility to pursue ongoing investments in new product development," president and chief executive officer T. Tracy Bilbrough said in the release.

In addition, the company said the financial restructuring has sharply reduced its debt and interest payments, better positioning Generation Brands to capitalize on opportunities both in the current market and emanating from the recovery of the housing industry and economy at large.

"During this process, Generation Brands met all of its financial targets," Billbrough said in the release.

As previously reported, the company's pre-packaged plan of reorganization was confirmed on Jan. 15 by the U.S. Bankruptcy Court for the District of Delaware.

Under the plan:

• $125.6 million of the company's existing first-lien debt will be continued under the terms of an amended credit agreement;

• Existing term loans under the first-lien credit agreement that are not continued as cash-pay term loans will be converted into new payment-in-kind term loans;

• In exchange for the company's second-lien debt, a newly formed corporation will issue new common stock to the second-lien lenders for a total common equity ownership of 91.75%;

• The reorganized company will issue 7.5% of the new common stock to holders of QHB Holdings notes; and

• Quad-C Partners VI, LP will purchase $20 million of new preferred stock.

Each share of series A preferred stock will be entitled to receive dividends at an annual rate of 15% of the stated value;

• Holders of general unsecured claims will retain their rights and will be paid in full in accordance with the reinstated rights; and

• All other creditors and equity holders will retain all of their rights.

Generation Brands, a Cary, N.C.-based lighting, electrical wholesale, home improvement, home decor and building industries company, filed for bankruptcy on Dec. 4. Its Chapter 11 case number is 09-14312.

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