DELAWARE, OHIO — Franchise Group, parent company of Pet Supplies Plus (PSP), has filed for Chapter 11 with the US Bankruptcy Court for the District of Delaware. The company announced it has entered into a restructuring support agreement (RSA) to strengthen FRG’s capital structure and best position its brands for continued growth. Franchised locations of the brands are not part of the bankruptcy filing.
“The RSA contemplates the proposed equitization of the first lien debt into 100% of the equity in the reorganized enterprise, which would substantially reduce the company’s debt, enhance liquidity, and strengthen the enterprise for the benefit of Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings and their stakeholders,” according to the company.
Pet Supplies Plus commented, “While it is unfortunate that Franchise Group’s financial challenges necessitated this action, Pet Supplies Plus remains strong and well positioned for success today and into the future. PSP has continued to deliver strong growth and positive cash flows. PSP expects to continue this growth, regardless of the financial position of Franchise Group. Franchise locations are NOT included in the Chapter 11 proceedings initiated by Franchise Group.”
As part of the restructuring plan, the lender group will provide $250 million in debtor-in-possession financing which will provide Franchise Group with necessary funds to maintain operations across its businesses and fulfill commitments to employees, customers, vendors, franchise partners, and other stakeholders.
“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus [and more] to realize their full potential,” said Andrew Laurence, Franchise Group's president and chief executive officer. “Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening Franchise Group's balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”
In addition, Franchise Group is filing motions with the court to maintain “business-as-usual” operations for Pet Supplies Plus, The Vitamin Shoppe, Buddy’s Home Furnishings, and FRG during the process. These motions include requests to continue to pay wages and provide benefits to employees and continue to offer customer programs.
“Everything remains business as usual for Pet Supplies Plus and Wag N’ Wash stores, both now and moving forward,” PSP added. “Franchisees, corporate employees, vendors and customers are not impacted in any way.”
All PSP stores remain open for business and will continue to serve customers in-store and online, including all rewards, programs, offers and promotions.
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