iHome set to buy Strouds for $38M
Janice Chamberlain -- Home Textiles Today, February 12, 2001
CITY OF INDUSTRY, CA -If the bankruptcy court gives it the nod, Strouds will sell the assets of its business to iHome.com for approximately $38 million. This would include 50 stores, two distribution centers, the corporate headquarters and additional assets including all trade names, trademarks, copyrights and the company website.
The sale agreement is supported by Strouds' unsecured creditors' committee and the boards of directors of both companies.
"Since the company's voluntary Ch. 11 filing in September 2000, management and the board of directors have been exploring various alternatives that would result in maximum recovery to our creditors and, at the same time, have the least impact on the jobs of our employees," said Thomas Paccioretti, president and ceo, Strouds. "After careful consideration, it was determined that sales of substantially all company assets is in the best interest of Strouds' creditors, employees, customers and suppliers."
Paccioretti will continue as president and ceo of Strouds and the corporate headquarters and distribution facilities here will remain operational. The sale is scheduled to be completed in March.
iHome was founded in July 1999 by Gavin Mandelbaum, founder and ceo, and Jerry Fang, founder and president. Jeff Stroud, son of Bill Stroud, Stroud's founder, joined iHome in December 1999 as vp of merchandising.
Among the specifications in the purchase agreement filed with the bankruptcy court, iHome will pay $2 million in cash at the closing, plus $60,000 in cash for each of the full-line stores-two units in Santa Monica, CA, one each in San Diego and San Mateo, CA, as well as for each additional full-line store it may acquire.
According to the agreement, any interested party may submit an overbid offer on or before Feb. 23 by 5 p.m. PST. The bid must be $50,000 in excess of the highest existing overbid. In that event, the buyer will have until 5 p.m. PST on Feb. 27 to increase its proposed purchase price by no less than the overbid offer plus the incremental bid amount. In the event of a sale of the assets to other than iHome, the buyer will be paid a flat breakup fee of $175,000 in cash.
iHome is to submit evidence of commitments for arrangements of financing of the contemplated transactions no later than Feb. 13, including without limitation a commitment from one or more established financing entities on terms satisfactory to the seller, which commitment provides for at least $10 million in capital financing.