8-K: Big Lots Finalizes Asset Sale to Gordon Brothers, Variety Wholesalers to Acquire Stores

Big Lots has completed the sale of its assets to Gordon Brothers, paving the way for Variety Wholesalers to acquire and operate a significant number of Big Lots stores.

Summary

• Big Lots, Inc. has finalized an asset purchase agreement with Gordon Brothers Retail Partners, LLC, which will lead to Variety Wholesalers, Inc. acquiring between 200 and 400 Big Lots stores and up to two distribution centers.
• The sale was approved by the Bankruptcy Court on January 2, 2025, and the transaction closed shortly thereafter.
• Variety Wholesalers plans to operate the acquired stores under the Big Lots brand and may employ existing Big Lots associates.
• The agreement includes the transfer of Big Lots assets, such as stores, distribution centers, and intellectual property.
• The company filed its monthly operating report for the period ended November 30, 2024, with the Bankruptcy Court, which is available on Kroll Restructuring Administration LLC's website.
• Trading in Big Lots securities is considered highly speculative during the Chapter 11 proceedings, and shareholders are likely to experience a complete loss on their investment.
• The November Monthly Operating Report was not audited and should not be the basis for investment decisions.

Sentiment

Score: 3

Explanation: The document conveys a mix of positive and negative aspects. While the asset sale is a positive step for the company's future, the expected loss for shareholders and the speculative nature of trading in its securities bring the sentiment down. The overall tone is cautious and realistic.

Positives

• The transaction provides a framework to preserve thousands of jobs.
• The Big Lots brand will be maintained through the acquisition by Variety Wholesalers.
• The sale enables the continued operation of a portion of the business.

Negatives

• Trading in Big Lots securities is highly speculative and poses substantial risks.
• Holders of Big Lots common shares are expected to experience a complete loss on their investment.
• The November Monthly Operating Report is limited in scope and not prepared for investment purposes.

Risks

• Trading prices for Big Lots securities may not reflect the actual recovery for holders in the Chapter 11 Cases.
• The company's ability to continue as a going concern is uncertain.
• There are risks associated with third-party motions in the Chapter 11 Cases.
• The Chapter 11 Cases could have adverse effects on the company's liquidity and results of operations.
• Employee attrition and the ability to retain key personnel are risks during the Chapter 11 Cases.
• The likely cancellation of common shares in the Chapter 11 Cases is a significant risk for investors.

Future Outlook

The document contains forward-looking statements regarding the company's business strategy and anticipated trends, but cautions that these statements are subject to risks and uncertainties. The company does not intend to file Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K for subsequent periods.

Management Comments

• Bruce Thorn, Big Lots President and Chief Executive Officer, said, 'We are pleased to close this strategic transaction, which provides a framework to preserve thousands of jobs, maximize value, and maintain the Big Lots brand.'
• Kyle Shonak, Gordon Brothers Chief Transaction Officer, said, 'We were proud to support Big Lots through the restructuring process to enable the Company's continued operation, and look forward to working with Variety Wholesalers to support Big Lots go-forward footprint.'
• Lisa Seigies, Variety Wholesalers President and CEO, said, 'Variety is thrilled to officially welcome the Big Lots brand and looks forward to operating hundreds of Big Lots store locations.'

Industry Context

This announcement reflects the ongoing challenges in the retail sector, particularly for discount retailers. The acquisition by Variety Wholesalers indicates a consolidation trend in the industry, where larger players are absorbing smaller ones to gain market share and operational efficiencies.

Comparison to Industry Standards

• The sale of assets through a Chapter 11 bankruptcy process is a common strategy for distressed retailers, similar to the recent cases of other retailers such as Bed Bath & Beyond and Tuesday Morning.
• The acquisition of store locations by Variety Wholesalers is a strategic move to expand their footprint, similar to how Dollar General and Dollar Tree have grown through acquisitions and new store openings.
• The focus on preserving jobs and maintaining the brand is a common goal in such transactions, aiming to minimize disruption and retain customer loyalty.
• The expected cancellation of common shares is a typical outcome in Chapter 11 bankruptcies where the company's debt burden is too high to allow for a full recovery for equity holders.

Legal Proceedings

• The company is operating under Chapter 11 bankruptcy protection.
• The sale of assets was approved by the Bankruptcy Court.

Stakeholder Impact

• Shareholders are expected to experience a complete loss on their investment.
• Employees at the acquired stores and distribution centers may be offered employment by Variety Wholesalers.
• Customers will continue to have access to Big Lots stores under the new ownership.
• Creditors will be subject to the bankruptcy proceedings and may receive a recovery based on the plan of reorganization.

Next Steps

• Variety Wholesalers will begin operating the acquired Big Lots stores.
• Big Lots will continue to operate under Chapter 11 bankruptcy protection.
• The company will continue to file monthly operating reports with the Bankruptcy Court.
• The company will work with Gordon Brothers and Variety Wholesalers on the transition.

Key Dates

Keywords

asset sale, bankruptcy, Chapter 11, retail, store acquisition, distribution centers, Variety Wholesalers, Gordon Brothers, Big Lots, restructuring