Updated! In another setback for hhgregg, the anonymous bidder that had agreed in principal to buy the beleaguered retailer out of bankruptcy has backed out of the deal.
The “stalking horse” bidder — tentatively identified by the Indianapolis Business Journal as an affiliate of hhgregg ad agency Zimmerman Advertising — had signed a non-binding term-sheet agreement to acquire the chain in the wake of its Chapter 11 filing last week.
But the 132-store CE, majap and furniture merchant announced late yesterday that the two parties had failed to reach a definitive purchase agreement, purportedly after Haier objected to a $6 million critical-vendor payout to the bidder, and the deal has since been nixed.
Instead, the company will turn its attention to unnamed third parties that have expressed “strong interest” in buying some or all of the retailer’s assets, hhgregg president/CEO Robert Riesbeck said.
“We and our advisors continue to work with potential acquirers to help them understand our business model for future growth and our value proposition,” he said.
They’d better hurry — potential buyers have until April 21 to enter their bids.
The groundwork for hhgregg’s woes was laid when the late founding-family scion Jerry Throgmartin launched an aggressive geographic expansion two decades ago which saw the Indianapolis retailer grow from 18 to 220 stores across 19 states.
The strategy, fueled by a public offering and chief investor Freeman Spogli & Co., a private equity firm, envisioned hhgregg as a national chain.
But the plan was upended by an unfortunate confluence of events, including Throgmartin’s untimely death; the recession; e-commerce competition; and disruptions within the TV category, the business’s bread-and-butter.
The multiregional buildout eventually stretched the company’s leadership ranks, which led to a succession of management teams and unsuccessful forays into exercise equipment and other merchandise categories.
In the lead-up to the bankruptcy, hhgregg experienced a punishing holiday quarter; brought in investment banking firm Stifel Financial Corp. to help it weigh its options; and began closing 88 showrooms, representing 40 percent of its store base, in a pullback from four major markets.
Looking ahead, the company has obtained interim approval of an $80 million debtor-in-possession loan to keep it running during the sale process, and said it “will continue to operate in the ordinary course of business throughout the restructuring process.”