Norwalk Furniture strikes a deal, work to resume soon

NORWALK The cards were laid on the table late Monday evening for Norwalk Furniture. F
Cory Frolik
May 24, 2010

NORWALK

The cards were laid on the table late Monday evening for Norwalk Furniture.

For local employees, it's a winning hand.

The financial crisis that led to the suspension of operations at Norwalk Furniture's various plants may not be over -- but the suspension is.

Workers resumed production at the Norwalk plant last week, finishing outstanding orders. But workers will soon be back at the plant full time, said Domenic Aversa, acting chief executive officer of Norwalk Furniture.

"We'll be notifying employees soon when to return to work. We're going to work with those scheduling issues tomorrow ... we're going to need to ramp back up, and we're not sure if it'll take one day or five days," Aversa said. "The company will be fully funded and will be resuming and operating at full pace, and this time with greater working capital."

The investment firm IRG Capital Group has joined forces with Blackbird Capital Partners, and together they signed a letter of intent to purchase the assets of the 106-year-old company. While details of the business agreement are not being released, Mosbrook said it's a done deal.

"We talked to about eight different investment firms of different kinds, and we determined that these two groups were the best fit for this deal, both from an investment standpoint and for the long-term viability of the company," said Joe Mosbrook, spokesman for the Norwalk Furniture.

Norwalk Furniture closed its doors July 21 after Comerica stopped its line of credit and demanded the company pay its $11 million debt. When it could not pay, Comerica seized the company's assets.

"They ran out of time and money," a business insider told the Register. "There was no bad motive. The capital dried up, and the bank said at the end of the day, 'We have $11 million in debt and we want it, and your assets do not cover it.'"

After protests staged by Norwalk Furniture union members at its Detroit branch and other pressure applied by company advocates, Comerica agreed to listen to offers for purchase of the company. Talks led to a deal that was finalized Monday.

Long-term fiscal strategies were at the center of negotiations about the sale of Norwalk Furniture. Finding the right business partners was crucial in engineering a business model that works in today's market, company representatives said.

IRG Capital Group and Blackbird Capital Partners are banking on future profits.

"The saw the potential in the product, (and) they saw the stability of the company. The company clearly has been hit by the downfall in the U.S. housing market, but that's not going to last forever," Mosbrook said.

The company's restructuring plan, which is orchestrated by the outside firm Morris-Anderson & Associates, is supposed to "reposition the company for profitability by the fourth quarter of 2008," according to the company.

Mosbrook did not know the specifics of the restructuring plan. He and Aversa both said no payroll cuts are planned.

Two large factors in the expected turnaround are a pair of $2 million, low-interest loans. The Ohio Department of Development, supported by Gov. Ted Strickland and Lt. Gov. Lee Fisher, offered one of the loans. The other came from Fulton, Miss., Mayor Paul Walker, and Itawamba County, Miss., development executive director Greg Deakle.

Norwalk Furniture has a plant in Fulton.

Aversa attributes the company's success to the collective effort of many people.

"Our focus and our attention was always the same -- to get back these jobs and preserve these jobs, and preserve a 106-year-old company," Aversa said.

The company was on the right track just prior to the financial crisis involving its bank, Aversa said. That is why he said the business was so attractive to outside private equity firms.

IRG and Blackbird are dedicated to investing in the company and growing it, he said.

Joe Balcerowski, a Norwalk Furniture employee on the recliner line with more than 24 years of experience, said the news of the deal comes as a great relief to him.

"If they worked out the financial restructuring, I think it's terrific for the owners, the workers and the community," Balcerowski said. "I was hopeful it would be reached and reached quickly ... and I'm sure they did everything that was possible to make it a good outcome to all the parties involved."