State to help Norwalk Furniture

NORWALK The state is attempting to ride to Norwalk Furniture's rescue. But a N
Cory Frolik
May 24, 2010

NORWALK

The state is attempting to ride to Norwalk Furniture’s rescue.

But a Norwalk Furniture spokesman said its bank, Comerica, is stifling the company’s turn-around.  

The Ohio Department of Development announced Thursday it would extend a multi-million dollar loan to Norwalk Furniture — allowing the company to restart operations and continue with its restructuring.

“While there is nothing finalized, I can confirm the state is prepared to offer a $2 million loan to Norwalk Furniture,” said Kelly Schlissberg, spokeswoman for the Ohio Department of Development.

“We believe this is a viable business, and our mission at the department is to keep jobs here, so we want to keep this plant open.”

But that plan won’t mean much unless Comerica agrees to negotiate Norwalk Furniture’s debt, company representatives said.

A banker told the furniture company’s management on Friday that it owed the entire balance of its $11 million revolving debt, Norwalk Furniture spokesman Joe Mosbrook said.

“They owe $11 million, which for a company this size really isn’t that much,” he said.

But the bank killed the company’s line of credit, which effectively shut down operations in Norwalk.

When Comerica demanded its money, the company didn’t have it to fork over. The bank then seized $38 million of Norwalk Furniture’s assets.  

Domenic Aversa, acting CEO of Norwalk Furniture, said five private equity firms have shown interest in purchasing the company, but the bank refuses to hear their offers.

This is particularly puzzling because Norwalk Furniture officials do not believe the bank could recoup more than $9 million through selling off all of its assets.

“If Comerica forces a liquidation of the company assets, they will actually yield less money than they would if they accepted one of many investment offers,” Aversa said in a prepared statement. “More importantly, 2,000 workers in four states will suffer.”

Aversa, managing director of the Cleveland office of MorrisAnderson, took control of the company as part of a restructuring plan to reduce production costs.

Restructuring requires another company’s support, but Mosbrook said the bank refuses to enter into negotiations with other buyers.

“It is very unusual because they’ve been a longtime banking partner,” Mosbrook said.

“We need Comerica to work with us and help find a solution, and they’ve been totally unwilling. There’s been a lot of other people who’ve helped out a lot.”

Jim Wiedenheft, executive director of the Huron County Development Council, said if the state cannot figure out how to help Norwalk Furniture recover, his faith in Ohio will be rattled.

If they can’t resolve “the situation with this particular business, of this size, in a community like this — that’s already in a distressed zone — I will have some serious concerns about the future of Ohio,” he said.

Lt. Gov. Lee Fisher is slated to visit the Norwalk plant today.