HALF MOON BAY, Calif. – In keeping with its previous decision to sell excess land and other assets, Nurserymen’s Exchange, Inc. (NEI), a leading wholesaler of indoor potted blooming plants, specialty foliage, and edible plants in the U.S. that markets under the BloomRite® brand, today announced that it has entered into an agreement with a Bay Area company for the sale of approximately 28 acres for $8 million, which parcel represents a portion of the company’s excess land assets. The agreement requires a 60-day due diligence period.
NEI has also attracted interested parties in an asset sale of its business that would be completed under Section 363 of the U.S. Bankruptcy Code. As a result, NEI today filed a voluntary petition under Chapter 11 with the U.S. Bankruptcy Court for the Northern District of California in San Francisco to commence the process. Pending Court approval, a competitive bidding process will be held to determine the highest possible value for the operating business, and for the land as a separate sale. This process is expected to be completed within approximately 90 -120 days, and the company hopes to emerge from Chapter 11 with new ownership and a significantly stronger financial foundation.
The company’s senior lender has committed up to $5 million in new debtor-in-possession (DIP) financing, which will be used to support operations during the Chapter 11 period. Customers should see no interruption in the continued delivery of NEI plants and flowers.
“The past few years have been extremely challenging for everyone in the nursery industry as declines in disposable income translated into reduced consumer purchasing,” stated Jack Pearlstein, chief executive officer. “As a result, we began a significant operational restructuring two years ago to adjust our production and operations to better meet customer demand in the new economy and to position the company for sale to a strategic or financial buyer. Our results for the fiscal year ending June 30 indicate that we are completing this business turnaround: We achieved sales in excess of projections with most core crops selling out in all major holidays. For this fiscal year, we should achieve positive adjusted earnings and $10 million in cost savings resulting in more than $6 million improvement in adjusted EBITDA on a year-over-year basis. Our employees have been steadfast participants in this program, and their loyalty over generations has been one of the characteristics of our company.
“With operations now functioning well, we must turn to restructuring the financial side of our business. We are pleased to have found a Bay Area buyer for the land, the sale proceeds from which will be used to pay down debt and help us restructure our balance sheet going forward. We have been actively pursuing a sale to a suitable buyer for the operating business and will continue to do so while we are operating under Chapter 11 protection. With support from our lender and longtime customers and suppliers, it is our intent to make this a fairly quick process so that we can emerge with the right financial foundation on which to build for the future.”
Justin Dautoff, chief operating officer of NEI, went on to state that, “As we complete these necessary actions under Chapter 11, we will continue to operate in the ordinary course of business. Our offices and greenhouses will be open, employees will work their usual hours and be paid in the usual way, and we will ship products to our customers on schedule.”
Dautoff noted that NEI, which has operated without collective bargaining since its inception 70 years ago, had been subject to a certification attempt by the United Farm Workers (UFW), including an election last year. However, last week notice was received from the Regional Board of the Agricultural Labor Relations Board petitioning the State Board to dismiss the UFW’s election petition on grounds that the required level of peak employment for an election had not been reached. NEI will continue employing its staff as usual.
Dautoff further affirmed that the company has “reached out to some of our vendors to gain their support and is extremely gratified by those who have shown their willingness to work with us, and even to communicate with their peers to encourage their support. Since we are operating under Chapter 11 protection and have commitments for new financing, our vendors can have greater confidence in our ability to pay for goods and services delivered from this point forward. We look forward to working with them for many years to come. We realize how difficult this recessionary environment has been for all of our colleagues. It is our intent to complete negotiations with the right buyer with all due speed to maximize the value of our assets and be able to restructure our secured and unsecured debt in a way that will be acceptable to all concerned.”
Vendors who do business with NEI after today’s filing will be paid in the ordinary course of business. The law prevents the payment of any amounts outstanding at the time of the filing (pre-petition). Vendors and others who have a claim against the company will receive notice from the Court in the next 7-10 days.
NEI has retained Stephen Finestone as bankruptcy counsel; Katten Muchin Rosenman LLP as special corporate counsel; FocalPoint Partners LLC as its investment banker; and C&A, Inc. as turnaround consultants. For additional information, please visit www.bloomrite.com or www.omnimgt.com/SBLite/Nurserymens for information about the Chapter 11 process.
About Nurserymen’s Exchange, Inc.
Headquartered in Half Moon Bay just south of San Francisco, Nurserymen’s Exchange has been a leading wholesaler of indoor potted blooming, specialty foliage, and edible plants since 1941. This family-owned business developed over the decades to the current state-of-the-art and ecofriendly greenhouse growing facilities and unique relationships with specialty breeders and suppliers around the world. Today NEI services a broad customer base consisting of major grocery retailers, mass merchandisers, home and garden centers, and independent operators. The company is known for its BloomRite® brand and signature crops including Parade®, Victory®, Palace® Roses, Get Mee® Campanula, Sun Star, and European Tree®. NEI products are distinguished from competitors by its consistent high quality and innovative designs for gifts or other home décor. The company employs approximately 160 people at its headquarters and at its brokerage office in Vista, Calif.
Source: Nurserymen’s Exchange, Inc.