Home-improvement retail chain Orchard Supply Hardware, which has six North Bay stores, today filed for Bankruptcy Court reorganization protection and has inked a $205 million tentative deal with Lowe's Home Improvement, which has four North Bay stores, to acquire many of the OSH stores.
North Carolina-based Lowe's agreed to be the initial "stalking horse" bidder for much of the OSH assets, including at least 60 of the 89 California stores and two in Oregon, according to a joint statement and court documents.
A Lowe's spokesman said it's not yet decided which locations will be purchased. North Bay OSH stores are located at:2230 Cleveland Ave. in Santa Rosa1390 N. McDowell Blvd. in Petaluma1151 Andersen Dr. in San Rafael3980 Bel Aire Plaza in Napa1500 Oliver Rd. in Fairfield220 Peabody Rd. in Vacaville
“Orchard’s neighborhood stores are a natural complement to Lowe’s strengths in big-box retail, offering smaller-format hardware and garden stores catering to the needs of local customers,” said Robert Niblock, chairman, president and chief executive officer of Lowe’s. “Strategically, the acquisition will provide us with immediate access to Orchard’s high density, prime locations in attractive markets in California, where Lowe’s is currently underpenetrated, and will enable us to participate in a larger way in California’s economic recovery."
Lowe's has about 1,750 stores, including North Bay locations in Cotati, Vallejo, Fairfield and Vacaville. The company had planned to open a store in Petaluma but dropped that plan in 2011.
OSH stores will remain open, employees paid, incentive programs honored and "the vast majority" of vendors paid during the transitional period.
An asset auction is tentatively set for Aug. 14 in New York City. Under the stalking horse agreement, Lowe's would have to be outbid by $12 million and would get a 3 percent "breakup fee" on the purchase price of a sale to another entity.
San Jose-based OSH said in a court filing that it is seeking Chapter 11 reorganization because it was "overleveraged" and "increasingly competitive conditions and a perilous California economy" made sales fall 21 percent from 2007 through 2010.
OSH amassed debt in 2006 while still owned by Sears Holding, and the deal for the funds was coming due in December of this year, according to the documents. The company said it also had costs associated with Sears' spinoff of OSH as an independent public company.
OSH had revenue of $657 million in fiscal 2012, compared with $50.5 billion for Lowe's.