O'Sullivan to sell substantially all assets; says 'reorganization did not work'

By Jennifer Lanning Drey

Portland, Ore., June 21 - O'Sullivan Industries Holdings, Inc. plans to discontinue operations at its only facility and sell substantially all of its assets, according to Roland Geddie, general council for O'Sullivan.

O'Sullivan emerged from Chapter 11 bankruptcy in March 2006 with a commitment for up to $50 million in exit financing from Wachovia Bank.

"Basically, the reorganization did not work. We ran into a liquidity crunch and didn't survive," Geddie said.

He declined to comment on the cause of the company's liquidity problems.

O'Sullivan does not yet have a purchase agreement in place for the assets at its Lamar, Mo., plant and is uncertain of the timeframe for the closure, according to Geddie.

As previously reported, the company's plan of reorganization included a cash payment for general unsecured creditors and a potential additional settlement for all vendors and utility providers electing to participate, a warrant offering for the company's 13 3/8% senior subordinated notes due 2009 and the conversion of its secured notes into substantially all of the equity of the reorganized company and $10 million of new secured notes.

When exiting bankruptcy, O'Sullivan said it would use proceeds of its revolving credit exit facility, which was secured by substantially all the company's assets, to support the implementation of the plan and to provide working capital for ongoing operations.

O'Sullivan is an Atlanta-based manufacturer of ready-to-assemble furniture.

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