FTD Companies – Seek Approval for Bidding Procedures to Cover Range of In-Pipeline Asset Sales, Aim for July 31st Sale Hearing

Register, or to view the article

June 6, 2019 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order. The bidding procedures order would authorize the Debtors' to (i) adopt proposed bidding procedures in respect of one or more sales of the Debtors' assets (the "Sale(s)"), (ii) enter into one or more stalking horse agreements (including bidder protections) and (iii) schedule an auction/sale timetable (including a July 22nd auction and a July 31st sale hearing). The sales order would authorize the Sale(s) [Docket No. 82]. 

Notwithstanding that some of the Debtors assets are already subject to existing, or in the process of being negotiated, asset purchase agreements, the Debtors are looking for Court approval of off-the-shelf, largely pre-approved documentation and a fixed timetable; in no small part to meet aggressive milestones agreed by the Debtors in respect of their debtor-in-possession ("DIP") financing.

The Debtors' motion states: "Access to the DIP Financing is critical to the Debtors' ability to operate their businesses through the completion of the Sale Process and during the pendency of these Chapter 11 Cases. Failure to adhere to the Milestones could jeopardize the Debtors' available borrowing under the DIP Facility and, in turn, compromise the Debtors' chapter 11 strategy. Indeed, the key focus of these Chapter 11 Cases is transitioning the Debtors' Assets to new owners efficiently and expeditiously. Given the steep cost of administering these Chapter 11 Cases, the Debtors simply cannot afford any delay in monetizing their Assets. Accordingly, it is in the Debtors' and their stakeholders' best interests to complete a robust Sale Process as swiftly as possible. The Bidding Procedures and the proposed timeline allow the Debtors to maximize value while minimizing superfluous administrative expenses. In view of the foregoing, the Debtors respectfully submit that the Court should grant the relief requested herein, in accordance with the proposed timeline for completing the Sale Process."

Sales and Marketing Efforts

The Debtors' assets include  a number of distinct operating entities which could be subject to separate sales, including:

  • FTD.com ("FTD.com") the business unit held by Debtor FTD.COM Inc.
  • The florist business segment (the "Florist Segment") held by Debtor Florists' Transworld Delivery, Inc.
  • The Company's Interflora business unit in the United Kingdom (the "Interflora Business")
  • The ProFlowers business (including ProPlants) which is operated by Provide Commerce ("ProFlowers")
  • The Gourmet Foods business (including Shari's Berries) ("Gourmet Foods") which is operated by Provide Commerce; and
  • Personal Creations (including Gifts.com) ("Personal Creations") which is operated by Debtor Provide Creations, Inc.

NB: (i) Together FTD.com and the Florist Segment constitute the "FTD Assets" and (ii) together ProFlowers, Gourmet Foods and Personal Creations constitute the "Provide Businesses."

In July 2018, the Debtors engaged Moelis & Case Company LLC ("Moelis") to serve as their investment banker in connection with their review of strategic alternatives, including the a sale of the entire Company or, in the alternative, separate transactions involving the sale of FTD.com, the Florist Segment and the Interflora Business. At the same time, the Debtors engaged Piper Jaffray & Co. ("Piper Jaffray") to serve in the same role in respect of the ProFlowers business, the Gourmet Foods business and Personal Creations (ie the Provide Businesses).

As a result of the combined efforts of the Debtors, Moelis and Piper Jaffray, significant progress has been made to date in respect of asset sales including the (i) $95.0mn sale of the FTD Assets and ProFlowers to Nexus Capital Management LP ("Nexus") and (ii) the sale of Interflora to The Wonderful Company, each sale announced on the Debtors Petition date. The below table summarizes the status of sales efforts in respect of the Debtors' key assets.

Business Unit Status Next Steps
FTD.com The Debtors have an executed an asset purchase agreement with Nexus further to which FTD, the Florist Segment and ProFlowers will to sold to Nexus for $95.0mn The Debtors intend to file a separate motion for Court approval of Nexus stalking horse bid
Florist Segment see above see above
ProFlowers see above see above
Interflora Sold to The Wonderful Company for $60.0mn Closed
Gourmet Foods Non-binding letter of intent from Farids & Co., LLC Execute stalking horse APA and request Court approval of APA at June 25 bidding procedures hearing
Personal Creations Non-binding letter of intent from strategic investor Execute stalking horse APA and request Court approval of APA at June 25 bidding procedures hearing

Prepetition FTD Sale Process 

The bidding procedures motion details: "Beginning in July 2018, Moelis spearheaded an expansive two-part prepetition FTD Sale Process, which began with Moelis soliciting interest from 123 parties regarding consummating a strategic transaction focused on the entire Company. Specifically, Moelis contacted 29 potential strategic parties and 94 potential financial sponsors to market a sale or merger of the entire Company. 

In response to this initial outreach, certain parties expressed interest in acquiring specific Assets, including the Interflora Business. Moelis also contacted seven potential international strategic parties and six potential international financial sponsors to determine their interest in a potential acquisition of the entire Company or, in the alternative, in a potential transaction for the sale of the Interflora Business. This initial outreach was fruitful. The Debtors executed confidentiality agreements with, and, beginning in October 2018, provided a confidential information presentation to, 54 parties that expressed interest in conducting due diligence on the Company's businesses. Moelis and the Debtors' management team also held a series of calls with potential bidders during which the management team discussed the Debtors' businesses, financial profile and strategic plan. In November 2018, the Debtors received six non-binding indications of interest from parties interested in acquiring the entire Company. In late 2018, the Debtors also received two indications of interest from parties interested in acquiring the Interflora Business. The momentum of the prepetition FTD Sale Process stalled following the release of the Company's 2019 Valentine's Day results. 

For a second year in a row, the Company materially underperformed during the peak Valentine's Day season, a critical period for floral and gifting retailers. After Valentine's Day, the Debtors strategically narrowed the focus of the FTD Sale Process with an increased emphasis on sales of individual businesses. During this second phase of the prepetition FTD Sale Process, Moelis solicited interest from a targeted group of 37 potential buyers focused on the FTD Assets. Moelis contacted parties that had communicated interest in consummating a transaction with the Company during the first phase of the FTD Sale Process, that had subsequently expressed interest in considering transactions involving the FTD Assets or that had expertise in executing complex ‘carve-out’ or similar transactions. Moelis also continued assisting the Debtors in advancing discussions with the parties interested in acquiring the Interflora Business and expanded outreach to other potential buyers. These adjustments were effective. By the end of May 2019, the Debtors had received eight non-binding indications of interest from parties interested in acquiring the FTD Assets. On May 31, 2019, the Company closed a sale of the Interflora Business to a subsidiary of The Wonderful Company through the sale of the equity interests of the Debtors' non-debtor affiliate, FTD UK Holdings Limited, for a cash purchase price of approximately $60 million (the "Interflora Sale"). The Debtors also are pleased to report that, on June 2, 2019, the Debtors entered into an asset purchase agreement with an affiliate of Nexus Capital Management LP for the sale of the FTD Assets and the Restructured ProFlowers Business for an aggregate purchase price of approximately $95 million (the 'Nexus Agreement'). Upon finalizing schedules and certain other matters related to the Nexus Agreement, the Debtors intend to seek by separate motion approval of the Nexus Agreement as a Stalking Horse Bid for the FTD Assets and the Restructured ProFlowers Business (the 'Nexus Stalking Horse Bid'). Executing the Nexus Agreement was a major step in support of the Debtors' ability to conduct a competitive postpetition Sale Process that will allow the Company to maximize value for creditor recoveries."

Prepetition Provide Businesses Sale Process

The bidding procedures motion details: "…Piper Jaffray solicited interest from 113 parties, including 11 potential strategic buyers and 102 potential financial buyers, in acquiring one or more of the Provide Businesses. The Debtors executed confidentiality agreements with, and granted access to confidential Company information to, 31 parties that responded to this initial outreach with interest in conducting due diligence on the Provide Businesses. Piper Jaffray and the Debtors' management team also held regular calls and meetings with potential bidders to facilitate the parties' ability to conduct a thorough due diligence process. By early May 2019, the Debtors had received five indications of interest from parties interested in acquiring some or all of the Provide Businesses. 

Beginning in mid-May 2019, Piper Jaffray focused its outreach and marketing efforts on potential buyers that would be willing and able to serve as a stalking horse bidder for an expeditious sale of all, or a subset of, the Provide Businesses. Again, this strategy proved effective. In late May, the Debtors entered into non-binding letters of intent for the acquisition of (a) Personal Creations by a strategic investor and (b) Gourmet Foods by Farids & Co., LLC, which is owned by the founder of Edible Arrangements, LLC (together, in clauses (a) and (b), the "Potential Provide Stalking Horse Bidders"). The Debtors and their advisors are continuing to work to advance negotiations with these parties, with the goal of executing and seeking at the Bidding Procedures Hearing approval of Stalking Horse Agreements for the sale of Personal Creations and Gourmet Foods."

Key Dates

  • Bidding Procedures Hearing: June 25, 2019 
  • Bid Deadline: July 15, 2019
  • Auction: July 22, 2019 
  • Sale Hearing: July 31, 2019

Read more Bankruptcy News