Ohio-based US discount retail chain Big Lots has signed an agreement with an affiliate of Nexus Capital Management under which Nexus will acquire all the retailer’s assets and ongoing business operations.
Big Lots, along with its subsidiaries, has voluntarily initiated Chapter 11 proceedings in the US Bankruptcy Court for the District of Delaware to facilitate the sale process.
The company aims to continue serving customers in-store and online during the transition.
Big Lots president and CEO Bruce Thorn said: “We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts.
“The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimise our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value.”
Big Lots is currently assessing its operational footprint, which may involve closing further stores.
The retailer will continue to evaluate and optimise its distribution centre model.
Nexus will act as the “stalking horse bidder” in a court-supervised auction, with the transaction expected to close in the fourth quarter of 2024, subject to court approval and other conditions.
The proposed deal will close in the fourth quarter of fiscal 2024, if Nexus emerges as the winner during the bid process.
Big Lots has secured $707.5m in financing, including $35m in new financing from current lenders, to support operations during the sale process.
The company has also filed motions for court approval to continue paying employee wages and benefits and to make payments to critical vendors.
Big Lots has been working on strategic initiatives to improve sales and profitability, but like many others has faced challenges due to macroeconomic factors such as high inflation and interest rates.
These conditions have particularly impacted Big Lots, as discretionary spending on home and seasonal products has declined among its core customers.
Davis Polk & Wardwell acted as legal counsel and Guggenheim Securities served as financial advisor for the retailer during the transaction process.
In February 2024, Big Lots finalised a deal to acquire the entire inventory of the Hearthsong brand of children’s toys.
“Big Lots signs sale deal with Nexus, initiating Chapter 11 process ” was originally created and published by Retail Insight Network, a GlobalData owned brand.
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