Phoenix Brands Files for Bankruptcy Protection
20 Mai 2016 - 11:40PM
Dow Jones News
Phoenix Brands LLC, the closely held consumer products company
behind Ajax cleaners and Fab laundry detergents, filed for
bankruptcy protection and is putting its collection of household
products on the auction block.
The Stamford, Conn., company, which filed for chapter 11
protection on Thursday in U.S. Bankruptcy Court in Wilmington,
Del., is selling its assets after three years of declining sales,
according to Chief Executive William Littlefield.
The Phoenix Brands CEO traced the company's struggles to Procter
& Gamble Co. and others' roll out of products that combine
laundry detergent, fabric softener and brighteners into single-use
packets, which left Phoenix's core brands unable to compete against
such "mono-dose" products.
Phoenix, which outsources nearly all of its production, also was
hurt by its business model, Mr. Littlefield said in an affidavit
filed with the bankruptcy court. The company, which is backed by
private-equity firm Lincolnshire Management Inc., was stuck with a
number of costly long-term production contracts signed before the
downturn in its consumer laundry business.
The company tried to reverse course by selling assets and
cutting costs. It sold its Niagara starch brand in November, and
Lincolnshire pumped another $1 million into the business. But the
turnaround efforts weren't enough, and Phoenix turned its attention
selling off all its assets to pay its creditors.
Phoenix has lined up a trio of buyers for its laundry brands,
which also include Dynamo and Fresh Start in the U.S. as well as
Arctic Power and ABC in Canada, as going-concern businesses.
A.P. Deauville LLC, the maker of Power Stick deodorant and other
personal care products, has agreed to buy the U.S. laundry
business, which brought in $26.2 million last year, as well as the
company's Final Touch fabric-softener business for $5.9 million
plus the assumption of some liabilities. Lavo Inc. is seeking to
purchase the Canadian laundry brands for $5 million and affiliate
of Silver Swan Capital has agreed to pay $13 million for Phoenix's
Rit dye, the top-selling dye in America.
All three offers will be tested at a bankruptcy-court-supervised
auction. Companies selling their businesses in bankruptcy often
choose a stalking-horse bidder to set a floor price on the assets
in the hope of spurring a robust bidding process.
The company's senior lender, Madison Capital Funding, is
providing a $23 million bankruptcy loan to keep the businesses up
and running pending the going-concern sale. Just $2 million of that
amount is new money, however, with the remainder rolling up the
debt owed to Madison.
Phoenix Brands traces its roots back to 2003, when a group of
former Unilever employees founded Winter Brands. The company
purchased a number of assets—Rit dye, Final Touch fabric softener,
Niagara starch spray and Sunlight detergent—from a Unilever
affiliate. The following year, the company changed its name and in
2005 purchased the Colgate-Palmolive Co. laundry detergent business
as well as the license to use the Ajax name for laundry
products.
The laundry detergent and fabric-care products brought in $71.7
million in net revenue last year. But that hasn't been enough to
turn a profit, Mr. Littlefield said. The company has assets of some
$45.2 million and debts of $71.2 million, according to its chapter
11 petition.
Phoenix Brands' chapter 11 case is being handled by the law firm
of Morrison Cohen LLP, and the company has hired Houlihan Lokey as
its investment banker.
Judge Brendan Linehan Shannon has been assigned the case,
numbered 16-11242. He has scheduled an initial hearing on the
bankruptcy for Monday morning in Wilmington, Del.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
(END) Dow Jones Newswires
May 20, 2016 17:25 ET (21:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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