WESTBURY, N.Y.–Confirming rumors, Fortunoff will be purchased by an affiliate of NRDC Equity Partners, the owner of the Lord & Taylor department store chain. At the same time and to affect the transaction, Fortunoff has filed for bankruptcy protection.
“We are excited by the opportunities presented by affiliating with Lord & Taylor,” said Arnold Orlick, Fortunoff’s chief executive officer of the home goods and jewelry chain, in a statement. “It has been a difficult retail environment and capital constraints have limited our expansion opportunities. This transaction will help realign our capital structure and provide an avenue for future growth.”
Richard Baker, chairman of Lord & Taylor and CEO of NRDC Equity Partners, said NRDC plans to invest $100 million in Fortunoff, “with investments being made in both existing and additional stores,” Baker said in the statement.
In tandem with the bankruptcy filing, Lord & Taylor has made available a $10 million letter of credit to enable Fortunoff to continue to buy inventory. Certain of the company’s existing lenders have agreed to provide Fortunoff with debtor-in-possession financing that will be used to run the retailer during the bankruptcy process pending the sale.
The sale will be completed through a bankruptcy process that permits other interested bidders to make competing offers. Subject to certain approvals, the sale is expected to close in early March.