LNT suppliers hold onto threads of hope
September 17, 2008,
At The New York Market -- Today, this marketplace is reacting to renewed questions about the about the ability of Linens ’n Things to successfully emerge from bankruptcy.
The LNT buying group was enthused about their prospects earlier, said Kim Robertson, national marketing manager for Louisville Bedding. They spoke of a smaller but ultimately profitable chain following the company’s hoped-for emergence in early 2009.
But in the wake of renewed questions about the reorganization plan and reports that equity fund Cerberus Capital would take a pass on involvement, fears of a potential liquidation are again at the surface.
Peter Duda, a spokesman for Cerberus, said the company would not comment on the report. A spokesperson for LNT did not immediately return calls.
“We’re still cheering for them,” offered Sy Sadinoff, chairman of Beacon Looms. “We have not seen enough good news coming out of LNT yet to feel comfortable or confident, but we’re still shipping them.”
Sadinoff added, “It’s not good for anybody to have them disappear.”
Loren Sweet, president of Brentwood Originals, said, “We hope for nothing but the best.”
The LNT reorganization plan is dependent on support of its proposal for a debt-to-equity swap among secured noteholders and the acceptance of stock warrants by the unsecured creditors. While the plan is pending, the company is also under deadlines to meet DIP financing agreement benchmarks in October and December.
The scenario has been further complicated by widespread crisis in the financial industry and the billions of dollars that are at risk in the Lehman Bros. and AIG fiascos. Money will get even tighter and analysts expect even greater aversion to risk.