O'Sullivan financial condition worsens

Hiring the company's first million-dollar CEO, several of his friends from his former business, and moving the corporate headquarters hundreds of miles away apparently has done nothing to stave off the red ink bath for O'Sullivan Industries.
A sign was posted at the O'Sullivan plant today letting workers know they will get paid, but that was about the only good news that came from company pronouncements just a week after the apparently permanent layoff of 138 workers and one day after those workers met with state officials trying to help them land new jobs.
The company filed documents with the Securities and Exchange Commission today saying that it cannot make the $5.3 million interest payment on its $100 million 10.63 percent senior secured notes and will be trying to restructure its debt during the 30-day grace period.
Company officials refer to this desperate situation as "evaluating strategic alternatives."
The SEC document makes clear that this does not mean O'Sullivan Industries is defaulting on its loan. Company officials just haven't decided if they will make the interest payment.
During the 30-day grace period, company officials plan to do what they have been doing all along, according to the filing. They will look at their current capital structure, and in a phrase that should inspire those concerned about the viability of O'Sullivan Industries, they will "continue initiatives (they have) undertaken to improve their liquidity position and operations." In other words, they believe they are on the right track.
"O’Sullivan fully intends to continue to serve its customers and to pay its employees and vendors in the ordinary course. All of O’Sullivan’s facilities are continuing to operate and to fill customer orders," the filing said.
O'Sullivan officials have initiated discussions with representatives of their major stakeholders about alternatives, including a possible restructuring of their debt.
"As with any negotiation, no assurance can be given as to when and if O’Sullivan will succeed in concluding any such agreement with its stakeholders," the filing said.
The company has hired Lazard Freres & Co. LLC to serve as its financial advisor and Dechert LLP as its legal advisor.
The information in the filing was attributed to Rick Walters, chief financial officer, one of the many O'Sullivan Industries brought into the fold from Newell Rubbermaid by O'Sullivan's million-dollar CEO Robert Parker, who is more than one year into his tenure as O'Sullivan CEO. The pronouncements come, of course, from the company's new corporate headquarters in Roswell, Ga., a suburb of Atlanta.