Samsonite

Background

Samsonite, the world’s largest designer and distributor of luggage and related products, had operations in more that 100 countries and $1.3 billion in revenue in 2008.

The company faced a dramatic decline in demand for travel-related goods due to the global recession and it faced significant liquidity issues and an inability to meet its debt service costs. Nearly half of Samsonite’s U.S. retail stores were either unprofitable or did not generate sustainable revenues.

Project

Zolfo Cooper was retained by the company's board of directors to:

  • Assess short-term cash flow projections and business plan viability.
  • Identify out-of-court capital restructuring alternatives and assist in negotiating/implementing the Company’s capital restructuring plan.
  • Advise the Company on contingency planning including Chapter 11 costs and benefits.
  • Assist the Company in evaluating options for closing unprofitable retail stores in its 173 U.S. store chain.
  • Consult with the Company on its negotiations with the PBGC to amend certain lien rights held by the PBGC.

Outcome

Confirmed the viability of the business plan and the incremental capital requirements of the Company to meet its liquidity needs.

Assisted in the international restructuring transaction to reduce $1.3 billion of funded debt to a $240 million non-interest bearing note and infuse $165 million of additional equity capital.

Drove negotiations with the PBGC to secure their support for the new capital structure and agree to a significant reduction in their security interest.

Established the business case for a targeted Chapter 11 filing of the Samsonite Company Stores entity.

Rejected 75 unprofitable store leases and enabled negotiations with landlords for retained store leases driving an annual EBITDA increase of over $7 million.

Coordinated a pre-packaged Chapter 11 and executed within 63 days.

Established and implemented new store level P&L forecasting tool for the U.S. retail business.