Norwalk Furniture shuts down again after finance deal falls apart

NORWALK The future of Norwalk Furniture is again in doubt after a plan to sell the company crumbled
Cory Frolik
May 24, 2010

 

NORWALK

The future of Norwalk Furniture is again in doubt after a plan to sell the company crumbled Wednesday.

After weeks of negotiations, private equity groups IRG Capital Group and Blackbird Capital Partners pulled out of the deal.

"They did inform us Wednesday, ... in the afternoon, that they were not going to go forward with the purchase of Norwalk Furniture," Mary Geretz, a receptionist for the furniture company, said Thursday.

The announcement came two weeks after the two groups signed a revised letter of intent, expressing their interest and commitment in purchasing the company.

Stuart Lichter, president of IRG, confirmed to the Cleveland Plain Dealer on Thursday morning that the deal fell through. Lichter was traveling Thursday and did not immediately return requests for comment.

Geretz said company officials are scrambling to secure other sources of funding to get the company back in business.

"Now we are evaluating alternatives to that, and we are going to keep our customers, dealers and franchisees advised of any developments. Right now, we're back to evaluating alternatives because the groups that were involved let us know that they weren't going to go forward with the purchase after all," Geretz said.

The company's plants nationwide were shut down Wednesday for the second time in two months when the company's finances ran low again. Unable to cover payroll, production was brought to a halt.

"We basically didn't want to be in a position to have our employees come into work when we're not guaranteed by our lender, Comerica, that we'd be able to make payroll," Geretz said. "We are trying to work with other sources of funding to get the orders in-house produced."

Geretz said she had no specific information regarding what the company is doing to acquire new funding.

Hardly anyone wanted to talk about Norwalk Furniture on Thursday.

Bethany Dentler, Norwalk's economic development director, had no comment.

Nor did Fulton, Miss., Mayor Paul Walker.

Fulton is the home of a Norwalk Furniture factory that employs about 300 people.

Both Dentler and Walker said they had no news, but to try back later.

Spokesman Joe Mosbrook, who usually could be relied on for updates, no longer had any information to share.

Mosbrook's public relations firm was fired Wednesday, and he no longer represents the furniture company. Mosbrook declined to say why the business relationship dissolved.

Reached at her office, Mayor Sue Lesch did not sound in high spirits.

"The only thing I really can tell you is that the company is working hard with officials and others to look at options for keeping the company open," Lesch said. "This is far too good a company with far too skilled an employee base, and the Gerkens far too good of a family to let this die here."

Kelly Schlissberg, spokeswoman for the Ohio Department of Development, said state officials were disappointed to hear negotiations deteriorated.

The Ohio Department of Development said in late July it would offer a $2 million loan to Norwalk Furniture to help sweeten the deal for potential buyers. Now that the deal is off, Schlissberg said the Development of Development is still willing to help out in whatever way it can.

"Our loan offer to them showed how serious our commitment was to doing what we could for them. Our concern now turns toward the workers and their families, and their trying to get through this," she said.

Scott Talley, assistant vice president of corporate communications for Comerica, said "corporate policy is not to discuss customer relationships."

TIMELINE

April 19: Norwalk Furniture employees vote to accept concessions in order to keep the recliner line from leaving the Maple City.

July 21: Norwalk Furniture shuts down operations across U.S. The company's bank, Comerica, pulled its line of credit after the company amassed $11 million in debt.

July 28: A portion of the Norwalk Furniture workforce reports back to the plant to finish outstanding orders. Private equity groups begin negotiations to buy the company.

Aug. 4: Two investment firms -- IRG Capital Group and Blackbird Capital Partners -- sign letter of intent to buy the company. Company spokesman calls it a done deal. Work at plant continues to ramp up.

Aug. 15: Letter of intent expires with no deal reached. Company spokesman says it was "too aggressive" a deadline.

Aug. 21: IRG and Blackbird sign a revised letter of intent. Company representatives say it is only a matter of time until deal is inked.

Sept. 3: Production shuts down at Norwalk Furniture plants. Blackbird and IRG announce they are no longer pursuing a deal.