This page will be a repository for updates and links to articles in this ongoing story.
November 22
Do it Best Completes Purchase of True Value, Creating $6bln, 8,000-store Powerhouse Co-op
Do it Best announced Nov. 22 the signing of a purchase agreement to acquire True Value Co., creating what it calls "the world's largest network of independent home improvement stores."
Roughly 500 of True Value's 4,500 dealers already were doing business with Do it Best. Thus, the acquisition of the longtime rival brings up to 4,000 new dealers and up to $1.5 billion more purchasing power to Do it Best, whose 4,500 members purchased $4.57 billion worth of goods in the fiscal year ended June 30. The actual gains in numbers and purchases won't be known for many months, because other distributors--particularly Orgill and Ace--have been actively wooing True Value dealers to join them instead.
Do it Best said that, "for now," it will operate True Value as a separate subsidiary, thus avoiding any significant impact on Do it Best members' annual rebates. Do it Best also named a new leadership team for True Value.
November 15
Do it Best Will Keep True Value Accounts Separate, Starr Says
Do it Best President and CEO Dan Starr says Do it Best and True Value operations will be have separate profit and loss statements, so what TV dealers do won't affect DIB members' rebates.
"We will have a separate subsidiary where those [True Value] assets will go, and then we will have a separate P&L for those True Value operations, and they will be kept separate from Do it Best Corp.," Starr said during a Nov. 12 podcast produced by Do it Best. "... We're going to try to keep operations separate so that it has a minimal impact on Do it Best operating expense." Any expenses on Do it Best Corp.'s books that are related to the purchase will be minimized as much as possible, he said.
That said, Starr also pointed out that sales are slower this year. "That's going to have a bigger impact on rebates," he said.
Starr also stressed that Do it Best is acquiring True Value Co.'s assets and "only a few" assumptions of liability--"nothing historical." The primary assets being acquired are the inventory, the True Value brand name, a paint manufacturing facility, and True Value dealers' relationship with their customers. He said a big focus in the near term at True Value will be to "stabilize the operations and get them right, which means attacking their costs in those operations."
The True Value that's inside Do it Best won't be burdened by the debt that it had when True Value was majority controlled by a private equity firm, Starr said. But True Value's operating expenses are an issue. "We're not going to be bashful at all about attacking that directly," he said. TV has too many distribution centers and overly high personnel costs, he said.
"There's no gentle way to put it: You have to address those things," Starr said.
November 13
Who Won and Who Lost in True Value's Demise?
As we enter the final days of True Value Co.'s existence, how you feel about the distributor's Chapter 11 bankruptcy and sale to Do it Best may depend on whether you count yourself a winner or a loser in the deal. Here's one reporter's assessment.
Winner: Do it Best
Winner: Other Distributors
Loser: True Value's Vendors
Loser: True Value's Creditors
Winner: The Co-op Movement
Winners/Losers: True Value Employees
Loser: Vendor, Dealer, and Customer Trust
Winner: Insiders
November 13
Judge Approves Sale of True Value to Do it Best
U.S. Bankruptcy Judge Karen Owens signed Oct. 13 an order permitting the sale of True Value Co. to Do it Best.
The actual signing of the sale documents had been expected to occur around Nov. 22. After that could come some disputes over the amounts in True Value's so-called Cure Notice in which it promised to pay certain vendors. Most of those vendors are landlords, service providers, and utilities; product manufacturers that sold goods to True Value will have to talk to Do it Best to get some of the money owed.
The deal calls for Do it Best to:
Pay True Value $153 million in cash.
Assume up to $45 million of True Value's liabilities to vendors.
Acquire substantially all of True Values assets under section 363 of the Bankruptcy Code.
Provide up to $10 million to True Value's bank lenders if needed.
In practical terms, virtually all of Do it Best's $153 million cash payment will go to a group of creditors led by PNC; another $10 million will be paid either out of whatever is left in True Value's accounts or by Do it Best. The banks actually have a credit line of around $235 million, so even if they get $163 million from the bankruptcy they'll end up losing about $75 million.
Vendors also stand to suffer. They have filed claims totaling $98.7 million, of which $91.4 million is unsecured. If Do it Best ultimately pays out $45 million, it means the vendors will get only about half of what is owed them.
November 11
Nobody Else Bids to Buy True Value; Do it Best's Purchase May Get Confirmed on Nov. 12
True Value Co. declared Do it Best the successful bidder to acquire it after no other competitors sought to buy the company. This means that, on Nov. 12, True Value will ask U.S. Bankruptcy Judge Karen Owens to declare Do it Best the winner, plucking True Value from Chapter 11 bankruptcy.
Owens' hearing will take place at 10 a.m. ET on Nov. 12. In a Nov. 11 filing supporting a sale order, True Value said it had settled all but issues that could have tripped up the sale to Do it Best, and it argued that it believes it's in the right on the other two disputes. The deal now could be closed by Nov. 22.
True Value had intended all along for Do it Best to buy it, having negotiated a deal before declaring Chapter 11 bankruptcy on Oct. 14.
The deal calls for Do it Best to:
Pay True Value $153 million in cash.
Assume up to $45 million of True Value's liabilities to vendors.
Acquire substantially all of True Values assets under section 363 of the Bankruptcy Code.
Provide up to $10 million to True Value's bank lenders if needed.
In practical terms, virtually all of Do it Best's $153 million cash payment will go to a group of creditors led by PNC; another $10 million will be paid either out of whatever is left in True Value's accounts or by Do it Best. The banks actually have a credit line of around $235 million, so even if they get $163 million from the bankruptcy they'll end up losing about $75 million.
Vendors also stand to suffer. They have filed claims totaling $98.7 million, of which $91.4 million is unsecured. If Do it Best ultimately pays out $45 million, it means the vendors will get only about half of what is owed them.
November 11
Send Your True Value Customers to Us, Do it Best Tells Its Vendors
Eager to win True Value dealers even before it completes its hoped-for purchase of True Value Co., Do it Best is urging its vendors to tell the dealers they can switch to Do it Best in just 48 hours.
"As a team, partnered with you, we're even more effetive in fueling everyone's growth, together," Do it Best's message to vendors said. "If you know of a retailer who needs assistance, feel free to pass this on and let them know we are ready to help," Do it Best said. The "this" refers to the guide below, showing how a dealer can join the Do it Best cooperative and start purchasing from it:
November 9
Vendors Push Back with Limited Objections to True Value Co.'s Push to Sell Itself to Do it Best
While the total volume of vendor claims against True Value Co. nears $100 million--more than $91 million of it unsecured--some vendors also are filing limited objections to the way True Value hopes it can sell its operations to Do it Best.
For instance, Blue Rhino says it is the actual owner of the propane tanks that True Value dealers sell. "The Debtors [i.e., True Value Co. and its subsidiaries] have acquired no equity interest in the Blue Rhino assets," the company said. Thus, Do it Best cannot include those tanks among the assets it is slated to acquire if a purchase occurs, Blue Rhino said. Its filing to U.S. Bankruptcy Court requests that this matter be resolved before True Value's Chapter 11 bankruptcy is concluded.
Hardware Retailing magazine reports other creditors have filed reclamation notices. Among them is Black & Decker, whose attorney said "the value of the goods under reclamation was no less than $4,362,114, and these goods were received by True Value in the ordinary course of business on or after Aug. 30," Hardware Retailing wrote.
Black & Decker and its DeWalt affiliate received one of the biggest payouts from True Value during the 90 days prior to True Value's Oct. 14 Chapter 11 bankruptcy filing. The DeWalt division received $3.7 million, while Black & Decker itself got $437,600.
November 8
Ace Joins the Ranks of Distributors Seeking True Value Dealers
Add Ace Hardware to the list of distributors wooing True Value dealers to affiliate with them. An Ace staffer posted this promotion on social media:
Hardware Retailing magazine quoted an Ace Hardware Corp. e-mail in mid-Octobder saying Ace was asked to bid for True Value but declined.
The magazine also quotes Ace President and CEO John Venhuizen as saying in that e-mail: "Since 1998, we have converted 1,718 stores to Ace Hardware, 918 of which were formerly with True Value. Converting is always hard. But, over the years we’ve gotten pretty good at this. And now, I suspect the number of those who are interested will only grow.”
November 7
True Value Paid Execs $9.5mln Over Past Year and $16mln to Helpers in its Ch. 11 Bankruptcy
Some of True Value Co.'s newest filings in its bankruptcy case give a sense of the company's expenditures and priorities before it entered Chapter 11 bankruptcy status and worked to sell itself to Do it Best.
Here are some highlights from True Value Co. LLC's Statement of Financial Affairs, filed Nov. 5.:
The company has paid out nearly $16 million to lawyers, management advisors, and related firms as part of the bankruptcy process it entered into on Oct. 14. (See list above.)
Sixteen True Value executives were paid more than $9.5 million in salaries, retention bonuses, and expense repayments in the 12 months leading to Oct. 14. CEO Chris Kempe led the list with $1.3 million in payments, primarily from salary ($591,823), retention bonus ($568,150) and executive incentive ($142,037). All told, seven executives got $1.8 million in retention bonuses.
During its final three months before declaring bankruptcy, True Value paid vendors, landlords, and service providers $183.3 million to keep trucks rolling and products on shelves. Roughly 30 of those businesses got over $1 million apiece. Acon Equity Management, a unit of the private equity fund that holds a majority stake in True Value, has been paid $1.15 million over the 12-month period ending Oct. 14.
Meanwhile, the list of unpaid vendors grew to 893 claims worth $92.9 million as of late Nov. 7. Of that total, $87.8 million is unsecured.
November 6
Where do True Value and Do it Best's Distribution Centers Overlap?
HBS Dealer has created an interactive map showing the locations of True Value Co. and Do it Best Distribution centers. True Value already has given notice that it's planning to close the centers as part of its Chapter 11 bankruptcy. True Value also wants to sell itself to Do it Best, so there is a possibility that Do it Best will keep one or more DCs open, as sales to True Value dealers could force it to have additional storage space.
November 4
True Value Suspends Drop Ship Program, Recommends Dealers Use Do it Best
True Value Company told vendors and retailers it is suspending its drop ship program from Nov. 4 to 22 while in Ch. 11 bankruptcy, Hardware Retailing reports. True Value urged dealers to send their business to Do it Best, which is seeking to buy the $1.5 billion, 4,500-member distributor.
If Do it Best wins bankruptcy court approval to buy True Value, there are plans under way to have the sale occur around Nov. 22.
True Value said it is suspending drop ship because it aims to build warehouse inventory in the short term and enhance seasonal fill-rates heading into winter and spring, Hardware Retailing reported.
There are numerous anecdotal reports that vendors had stopped processing drop ship deliveries through True Value out of uncertainty over whether they'd be paid. As of the evening of Nov. 4, a total of 789 claims for payment totaling $76 million have been filed. Of that amount, $72.4 million of those claims are unsecured.
“Because Do it Best likely will be acquiring our assets and combining our business with theirs in the next few weeks, we think it makes sense to send your direct ship business to them as the right choice to handle that business until our sale transaction is completed,” the magazine quoted True Value as saying. “Of course, the decision on how to meet your direct ship needs during this time is entirely up to you and what makes sense for your business.”
Many other distributors also are making appeals to True Value dealers to become their main supplier.
November 4
Bankruptcy Judge Issues Final Order Letting True Value Use Existing Bank Accounts
U.S. Bankruptcy Judge Karen Owens issued Nov. 4 a final order authorizing True Value Co. to keep using its existing bank accounts and credit arrangements while its under Chapter 11 bankruptcy protection from creditors.
The order marks the end of a challenge by a consortium of lenders that would have kept True Value from using its bank credit lines, potentially forcing TV into liquidation. TV, the banks, and a committee of unsecured creditors ended that dispute last week when they reached an agreement that pays the banks more than it originally appeared they would be getting.
That agreement also increases the odds that Do it Best will buy True Value out of bankruptcy. True Value identified Do it Best as its preferred buyer when True Value filed for Chapter 11 on Oct. 14. Another bidder could swoop in and offer more than what Do it Best has offered: $153 million in cash plus another potential $10 million for the banks, and up to $45 million in assumption of trade receivables.
True Value's credit agreements enable it to borrow as much as $238 billion from the banks, and because it lacks much of its own cash the expectation is that True Value will tap most of that credit line before it goes out of business. That means the banks could lose upwards of $75 million.
Meanwhile, a total of 689 companies have filed claims for payment totaling $73.7 million as of the afternoon of Nov. 4. Of that amount, $70.1 million of that credit was unsecured.
November 2
Crain's Chicago Business: Here's How True Value Went Bankrupt
True Value Co.'s Chapter 11 bankruptcy shows how hard it is to offer supply chain services, business management analysts told Crain's Chicago Business in a recent article.
Very few companies that offer supply chain services have the scale to do it well, the publication quoted Jeff Pehler, partner at business management consulting firm West Monroe, as saying.
"Building distribution centers creates high fixed costs, and any hiccups that occur — such as poor inventory planning — jack costs up higher," Crain's added. "The price of sending half-full trucks or overnighting freight, for example, adds up."
True Value's filings to the bankruptcy court said TV was hurt by supply chain disruptions during the COVID epidemic, causing sales to decline 8% in 2023 and another 14% year-over-year through August 2024.
“If your planning isn’t under control, your costs are also going to be out of control,” Pehler told the magazine. “... They weren’t able to live up to the structure of what was needed to support them. Especially when the tailwinds became headwinds.”
November 2
Co-Op's Board Chairman: 'We Had No Visibility' in Run-up to Bankruptcy
Members of the board of the True Value Co-op were caught unawares when True Value Co. filed for Chapter 11 bankruptcy status and sought to sell to Do it Best, the co-op board's chairman says in a new video. He also endorses Do it Best as an acquirer.
"While it's been disappointing, learning of the challenging financial situation that True Value has had, as a board, we had no visibility to the decisions of the company that were being made," said Lee Kuenning, whose family owns four True Value stores in Western Ohio. "We received the same communication that you did at the exact same time." True Value is 70% owned by Acon Investments, a private-equity firm.
Kuenning's YouTube video was shot at Do it Best headquarters in Fort Wayne, IN. Kuenning said the proposed purchase by Do it Best was a good deal because "We get to maintain our independence while working with a partner committed to our success. We get to return to a co-op, one that is financially strong, truly cares, and is here to hear our thoughts and our opinions." True Value stores also get to keep that name, he added.
November 1
Vendor Claims Near $72mln, of Which $68mln Is Unsecured
The mount of vendor claims in the True Value Co. bankruptcy is now nearly $72mln as of mid-day Nov. 1, with $68mln of those claims unsecured. We're now waiting for the official papers detailing the agreement with creditors that most likely will lead to a sale to Do it Best late this month (see story below).
October 31
Agreement Over Credit Dispute Clears Path for Do it Best to Acquire True Value by Nov. 22
A lending group that had fought True Value Co.'s plan to sell itself to Do it Best announced Oct. 31 it had reached an agreement that lets True Value keep using the lenders' credit line until a sale occurs on Nov. 22.
The announcement came on the second day of a hearing that--if the lenders had prevailed--could have forced the liquidation of True Value and damaged the operations of the 4,500 independent dealers in the True Value network. Those dealers collectively buy roughly $1.5 billion worth of products annually.
"Sanity has prevailed," said Bradford Sandler, an attorney for the unsecured creditors. "There are thousands of employees who are very grateful, to mention all the other constituencies. It's truly an extraordinary result."
As it now stands, the lenders will lose roughly $75 million worth of credit they had made available to the distributor. An attorney for the lenders warned that the deal with Do it Best still could fail unless the lenders get all $163 million of the $238 million they are owed, according to a transcript of the U.S. Bankruptcy Court hearing obtained by Webb Analytics. Do it Best had committed earlier to pay True Value $153 million, and under the new agreement it will provide a financial backstop of up to $10 million to ensure the lenders get $163 million.
October 31
Hearing on True Value Bankruptcy Continues; Vendor Claims Now Top $60mln
The U.S. Bankruptcy Court will resume a hearing this morning, Oct. 31, over whether True Value Company can continue using its bank loans to operate while in Chapter 11 bankruptcy status. The outcome will have implications on whether Do it Best can acquire True Value.
Meanwhile, vendors continue to submit claims in the case. As of early Oct. 31, 586 entities have submitted claims totaling $60.5 million, of which $57.7 million are unsecured.
October 29
True Value, Banks, and Unsecured Creditors 'Actively and Constructively' Talking
Tuesday's hearing over whether to let True Value Co. use borrowed money to keep operating while in Chapter 11 was adjourned until Wednesday afternoon, Oct. 30, because TV, its lenders, and unsecured creditors "are actively and constructively working towards reaching a consensual resolution," a court filing reported.
"In light of the progress achieved to date, the Parties each support a further adjournment as the Parties continue to negotiate a potential resolution," the filing said. "Accordingly, the Court has continued the October 29, 2024 cash collateral hearing to October 30, 2024 at 1:30 p.m. (ET) to provide the Parties with additional time to reach an agreement."
When it filed for Chapter 11 on Oct. 14, True Value had $219.46 million in revolving loan borrowings and $18.75 million in outstanding term loans from a consortium of financial instituations led by PNC Bank. True Value has reached an agreement to sell itself to Do it Best for $153 million plus assumption of certain liabilities.
If that sale takes place, the lenders would in effect lose $100 million. In addition, vendors have filed $52.6 million worth of claims, of which $50.2 million are unsecured. Do it Best's agreement with True Value calls for it to assume only as much as $45 million in trade payables.
The bank lenders argue that True Value doesn't have any money to keep operating during Chapter 11 beyond the credit lines it has obtained. The banks would prefer to stanch their loss by forbidding True Value from using that money.
October 29
Tuesday's Hearing Adjourned to Wednesday
A hearing before U.S. Bankruptcy Judge Karen Owens that was scheduled to take place today, Oct. 29, has been adjourned until 1:30 pm ET Wednesday, Oct. 30.
The hearing concerns whether True Value Co. can continue to use, while it's under Chapter 11 bankruptcy status, credit arrangements made for it by a consortium of bank lenders.
October 29
Total Value of Claims Rises to $48.2mln, of Which $46mln is Unsecured
As of 1:30 pm ET Oct. 29, vendors that sold products to True Value Co. say TV owes them a total of $48.2 million. Of that, just over $46 million is unsecured, according to the claims docket in True Value's Chapter 11 bankruptcy proceeding. A total of 465 claims have been filed.
Among the bigger claims filed recently was one for $1.78 million from Resideo Technologies, a maker of thermostats and security equipment.
October 29
Monday's Hearing Rescheduled to Tuesday
A hearing before U.S. Bankruptcy Judge Karen Owens that was to have taken place Monday, Oct. 28, has been rescheduled until Tuesday, Oct. 29.
The hearing will deal with whether True Value Co. can continue to use, while it's under Chapter 11 bankruptcy status, credit arrangements made for it by a consortium of bank lenders.
October 29
Creditor Claims, Mostly Unsecured, Now Top $36.9mln
An ever-growing list of claims filed by companies in the True Value Chapter 11 bankruptcy-law reorganization now tops $36.9 million, of which nearly $35.2 million is unsecured.
The list now stretches for 35 printed pages, includes more than 350 claims, and can be found here. According to HBSDealer, there are more than a dozen claims of above $500,000. At the top of the list is Inliten, which produces Christmas and seasonal lighten. It claims to be owed $1.8 million.
October 25
Closure Notice Posted for True Value's Ohio Distribution Center
Add the True Value Co. distribution center in Westlake, OH, to the list of DCs in which TV has told state authorities that a closure is imminent. Eighty-nine employees would be affected, with layoffs planned for between Dec. 14 and 28, True Value told the state.
Similar closure notices have been filed affecting its distribution centers in Manchester, NH (story), Kingman, AZ (story), Kansas City, MO (story), and Hanover Twp., PA (story).
October 24
Bankruptcy Judge Urges True Value to Settle with Its Lenders to Boost Odds of Selling to Do it Best
True Value Co. and its lenders must start in earnest to settle their differences over how the lenders' money is used while True Value is in Chapter 11 bankruptcy status with a plan to sell to Do it Best, a federal Bankruptcy Court judge warned the parties.
"It's the debtor's burden to provide adequate protection to the lenders," Judge Karen B. Owens said at a hearing Oct. 23, according to a partial transcript obtained by Webb Analytics.
Failure to start discussions in earnest with the PNC Bank-led lending group, Owens said, "will not end positively for the estate." This appears to be a warning that Owens could force the liquidation of True Value rather than let it stay alive and sell itself--as it has agreed to do under a "stalking horse" agreement--to Do it Best.
October 24
Emery Jensen Joins List of Distributors Wooing Dealers
"Thinking of changing your hardware distributor?" Emery Jensen Distribution asks in a new LinkedIn post. "Emery Jensen is here to help!" Neither its LinkedIn nor its website post mention True Value's Chapter 11 bankruptcy, but the timing suggests Emery Jensen has joined Orgill, the Hardlines Dealer Alliance, and other distributors in seeking to win over dealers. True Value wants to sell itself to Do it Best.
Emery Jensen, a division of ABC Supply, notes in its posts that it has 17 Distribution Centers with over $1.1 billion in inventory. "We’re ready to invest in your store with Free Inventory and Merchandising Support," the distributor wrote.
October 24
Seven Vendors, PBGC, Lessor Named to Unsecure Creditors Committee
The U.S. Bankruptcy Court appointed seven vendors, the Pension Benefit Guaranty Corp. (PBGC) and the real estate investment trust W.P. Carey to a Committee of Unsecured Creditors in the True Value Chapter 11 bankruptcy proceedings.
The seven companies are: STIHL, The Hillman Group, Rust-Oleum, Black & Decker (US), Ryder Integrated Logistics, Carhartt, and Sherwin-Williams. The PBGC is a federal agency that takes in and manages pension plans for employees of companies that have gone out of business.
October 23
Judge Quashes PNC Bank's Subpoena Seeking a Deposition from Do it Best
U.S. Bankruptcy Judge Karen Owens today quashed a subpoena by PNC Bank that would have forced Do it Best into a deposition to talk about its agreement to acquire True Value Co. out of Chapter 11.
The order was issued Oct. 23 just hours after Do it Best submitted the request in U.S. Bankruptcy Court in Wilmington, DE. Among other things, it meant that Do it Best officials won't have to give a deposition initially scheduled for today.
Do it Best's motion to quash the subpoena said PNC--leader of a group of financial institutions that have credit lines with True Value--was fishing improperly for details about the discussions that led True Value to sell itself to Do it Best. The sale would be part of a process in which True Value would petition for protection from creditors under Chapter 11 of federal bankruptcy laws while simultaneously identifying Do it Best as its favorite to take over the company.
PNC is fighting this plan, arguing a liquidation would wring greater value out of what's left of True Value than a sale would. True Value had $219.46 million in revolving loan borrowings and $18.75 million in outstanding term loans. If Do it Best is allowed, under its agreement with True Value, to buy TV for $153 million plus assumption of certain liabilities and up to $45 million in trade payables, the lenders would in effect lose $100 million.
"While PNC may wish to embark on a litigation strategy intended to cause the forced liquidation of Debtors’ assets, put 2,000 people out of work, cut off the primary source of supply to 4,500 independently-owned True Value Hardware stores across the United States and thwart a value-maximizing going concern sale of the Debtors’ assets and operations to Do it Best or some other bidder, it may not use Rule 45 as a sword against Do it Best to achieve those results," attorneys for Do it Best wrote. "The Subpoena is nothing more than a burdensome and costly fishing expedition apparently intended to undermine Do it Best’s stalking horse bid."
Do it Best's motion also noted that PNC wanted to know how Do it Best valued True Value's assets--confidential research and commercial information that the attorneys argued is protected from disclosure. "PNC’s attempt to obtain such information appears calculated to undermine Do it Best’s offer for the Debtors’ assets set forth in the [purchase agreement] thereby furthering PNC’s desire to see the Debtors’ operations shut down and liquidated," the motion said.
"Moreover, as the Debtors’ primary secured lender, PNC is a potential credit bidder at any auction of the Debtors’ assets and would obtain an extraordinary advantage over Do it Best in any such Auction were PNC permitted to see Do it Best’s confidential valuation information concerning the Debtors," the motion added. Because the Subpoena seeks production of, and to elicit through deposition, protected and confidential information, the Subpoena should be quashed."
October 23
Dealer Describes Sourcing Troubles: 'They Kind of Ran Down the Inventory a Lot'
It appears True Value dealers are scrambling to source products that they used to get regularly from True Value before it declared Chapter 11 bankruptcy. Nat Leblanc, an owner of Leblanc's True Value Hardware in Manchester, NH, said his company had to order 25 cases of a popular drain cleaner directly from the manufacturer because it wasn't available through True Value. "They kind of ran down the inventory a lot," he told the Manchester Union-Leader.
October 23
More Notices of Distribution Center Closures Sent to States
True Value has filed notices that it plans to close its distribution centers in Manchester, NH (story), and Kingman, AZ (story). Closure notices also have been submitted for DCs in Kansas City, MO (story), and Hanover Twp., PA (story). Notably, the Manchester notice was filed in July, the Manchester Union-Leader reported.
October 22
This M&A Expert Sees Wider Implications in the True Value Bankruptcy
"It could take until New Year’s before the Chapter 11 case is resolved, and you can expect a war between the distributors to win True Value members will go on well into 2025," Michael Collins of EquiNova Capital writes. "Shifts in dealer affiliations almost invariably lead to shifts in brands those dealers sell. There also potentially are changes in the competitive landscape as the bigger True Value dealers move to stronger, better-financed distributors.
"None of this matches the impact of superdeals like The Home Depot’s acquisition of SRS Distribution, but collectively the changes will be notable," Collins adds. "If you’re involved in a transaction or are thinking of selling, consider adding a note in your plans to watch this case."
October 21
True Value Notifies Vendors Regarding What It Can--and Can't--Pay
True Value Co. has told its vendors that "obligations for go-forward goods and services are given priority treatment" while it's in Chapter 11 bankruptcy status. However, True Value CANNOT pay for goods and services rendered prior to the Oct., 14 Ch. 11 filing without authorization from the bankruptcy judge.
All this comes from Hardware Retailing, whose parent (the North American Hardware and Paint Association) is a True Value vendor.
The magazine said True Value also encouraged vendors to keep moving drop-ship orders to True Value stores, and then count on the stores to send payments to True Value HQ. "You should not offer to issue a credit or ask customers to pay directly," True Value wrote. "This would be contrary to the law."
Here is a copy of the FAQ that True Value sent to its members. The FAQ was obtained by HBSDealer: https://eiqeditor.hbsdealer.com/file/HD16717e00748429305982158/TV%20FAQ
Full story is here: https://hardwareretailing.com/bankruptcy-judge-allows-true-value-to-use-cash-collateral-while-lenders-push-back/ in the section labeled "Vendors Receive Letter with Updates."
October 21
True Value Starts Taking Steps to Shutter Distribution Centers
State officials are starting to get notices that True Value Company is closing distribution centers as part of its Chapter 11 bankruptcy. Those closures might go through unless Do it Best or some other operation takes over True Value, saving it from liquidation. Notices posted already affect DCs in Kansas City, MO (story), and Hanover Twp., PA (story).
October 21
TV Dealers with Multiple Vendors Have Multiple Places to Get Their Goods
We're seeing numerous stories from True Value dealers, such as McKeithen's Hardware in Statesboro, GA, noting they have multiple vendors, so True Value Co.'s potential sale to Do it Best won't hurt them much (story). In Binghamton, NY, Kovarik Hardware issued a similar statement (story).
These statements by True Value dealers suggest there'll be strong competition among those other vendors (3 others, in this store's case) to win the bulk of the store's future business.
October 18
We Were Asked to Bid for True Value but Declined, Ace's CEO Says
Hardware Retailing magazine's coverage of the True Value-Do it Best story quotes an Ace Hardware Corp. e-mail saying Ace was asked to bid for True Value but declined.
The magazine also quotes Ace President and CEO John Venhuizen as saying in that e-mail: "Since 1998, we have converted 1,718 stores to Ace Hardware, 918 of which were formerly with True Value. Converting is always hard. But, over the years we’ve gotten pretty good at this. And now, I suspect the number of those who are interested will only grow.”
October 18
Court Filings Reveal True Value Was 'on the Brink of Collapse' Before Its Chapter 11 Move, Proposed Sale to Do it Best
True Value Co. owed PNC bank and other lenders at least $238.2 million when it filed for Chapter 11 Bankruptcy Law protection from creditors, and it will get to keep using that money while the Chapter 11 case proceeds, a federal Bankruptcy Court judge has ruled.
Judge Karen Owens' Oct. 18 order noted that True Value had $219.46 million in revolving loan borrowings and $18.75 million in outstanding term loans. The future of those loan covenants is one of the questions to be resolved, as True Value seeks to have Do it Best purchase its assets out of Chapter 11 for $153 million plus assumption of certain liabilities and up to $45 million in trade payables.
See full story: https://www.webb-analytics.com/post/court-filings-reveal-true-value-was-on-the-brink-of-collapse-before-its-chapter-11-move-proposed
October 18
The next hearings before U.S. Bankruptcy Court Judge Karen B. Owens will take place on Oct. 28 and on Nov. 4 in Wilmington, DE.
October 17
Do it Best Statement Declares It's Ready Now to Support True Value Dealers
Do it Best, responding to what a prelude in its press release described as "gross misrepresentations about product accessibility," issued a statement regarding True Value Company's Chapter 11 and plan to sell to Do it Best.
"Do it Best seeks to assure affected dealers that a stable and reliable solution, especially in the immediate term with drop ship orders, is already operating and ready to support all their product needs through a simple no-fee Do it Best application process that ensures ordering within 24 hours," the statement said.
Several other distributors, including Orgill and the Hardlines Distribution Alliance, have issued statements in the wake of True Value's plans declaring their readiness to take in True Value dealers.
Here is the statement:
October 16
True Value Board Member Urges Court to Approve Sale to Do it Best
Megan Menzer, owner of Newton's True Value Hardware and Chairperson of True Value's TV Cooperative Company as well as True Value's TV Holdco, submitted a declaration to federal bankruptcy court supporting motions that would lead to Do it Best acquiring True Value out of Chapter 11 Bankruptcy status.
"I can say with confidence that other store owners and I would be invested and cooperative in a going concern sale process, rather than a liquidation, and many of the risks I have outlined herein would be drastically reduced or eliminated through a sale instead of a liquidation," Menzer wrote.
Menzer warned the bankruptcy court to be wary of a Sept. 27 report by Hilco Consumer-Retail that provides what she regarded as "premised on multiple assumptions that are unrealistic and unreliable." For instance, she said dealers are unlikely to buy True Value's inventory in bulk, even at discount, as Hilco assumes they would.
She also said it would be hard to recover accounts receivables from True Value's 3,000 customers. "Indeed, I am aware that the Company is already having trouble collecting receivables, with many customers beginning to slow-pay invoices."
As for recovering receivables on drop-ship orders processed by True Value, Menzer said True Value "has not been paying drop-ship suppliers in recent months"--potentially inflicting damage on dealers' relations with these vendors.
October 16
PNC, Other Bank Lenders Oppose the Sale
PNC, a major lender to True Value Company, is fighting TV's plans to sell itself to Do it Best. The 119-page filing contains lots of details regarding True Value's process that led to its Chapter 11 filing and naming Do it Best as a "stalking horse" lead buyer.
Here's the filing: https://casedocs.omniagentsolutions.com/cmsvol2/pub_47528/e179b444-54e0-4ec9-97aa-6373e07c31eb_68.pdf
October 16
Hardlines Distribution Alliance Offers Is Services to True Value Dealers
The Hardlines Distribution Alliance has issued a statement that it's ready to help True Value Company dealers as it takes steps to be sold to Do it Best.
"[U]ncertainty may loom for many independent hardware dealers relying on their supply chain," the alliance wrote. "In response, Hardlines Distribution Alliance stands ready to offer stability and support during this critical time. With a robust network of over 60 independently operated distributors, HDA is uniquely positioned to assist dealers of all sizes, helping them navigate the changing landscape and maintain strong operations"
HDA's press release: https://hdaworks.com/hda-steps-up-to-support-independent-dealers-amid-true-values-chapter-11-filing/
October 15
Do it Best's Bid for True Value Is a 'Generational Opportunity for Growth,' CEO Says
Do it Best's planned takeover of True Value's 4,500 members and $1.5 billion in buying power delivers a growth opportunity that far outstrips anything the co-op could do organically, President and CEO Dan Starr says.
"To be able to have that kind of scale represents a tremendous growth avenue that, I just don't know how you could achieve it any other way," Starr told Webb Analytics in an interview Oct. 15. "You certainly can't do it organically at any speed that makes sense." He said that he, Do it Best's board, and other co-op members who have contacted him "all look at this as a generational opportunity for growth."
See full story: https://www.webb-analytics.com/post/do-it-best-s-bid-for-true-value-is-a-generational-opportunity-for-growth-ceo-says
Starr also was interviewed Oct. 15 by other media outlets. Here's what he said in those conversations:
Meanwhile, The Hardware Connection's lead story for October contains some reactions from True Value Dealers.
October 14
Orgill: We've Converted Hundreds of True Value Dealers Already; We Can Serve More
Orgill will "provide support" to True Value Company retailers as Do it Best bids to buy True Value. Orgill notes that 400 True Value retailers converted to Orgill in past 2 years and 65 more conversions are in the works. Orgill also says it shares business with True Value at 800 stores. Then the news release cites Orgill's recent advances and improvements
October 14
Press Release: Do it Best Makes Bid to Acquire True Value Assets
Do it Best says ts plan to acquire True Value Company "would create a worldwide store network exceeding 8,000 locations in the U.S. and more than 50 countries around the world.
October 14
Press Release: True Value Announces Sale Agreement with Do it Best
True Value Company, L.L.C. ("True Value" or the "Company"), one of the world's leading hardlines wholesalers, today announced that it has entered into an agreement to sell substantially all of the Company's business operations to home improvement industry peer Do it Best Corp.
To complete the sale in the most efficient manner, True Value and certain of its affiliates initiated voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. True Value will continue its day-to-day operations serving 4,500 independently owned retailers that rely on True Value for the right products, trusted expertise, and its 75-year-old iconic brand.
"After a thorough evaluation of strategic alternatives, we determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future," said Chris Kempa, True Value's Chief Executive Officer.
"We believe that entering the process with an agreed offer from Do it Best, who has a similar decades-long history in the home improvement space and also operates with a focus on supporting members and helping them grow, is the most beneficial next step for True Value and our associates, customers, and vendor partners. We thank these valued stakeholders for their continued loyalty as we work to secure a stronger future for True Value."