FAO Turns the Page on Chapter 11FAO Inc. emerged from Chapter 11 bankruptcy last week.
As part of its reorganization plan, the King of Prussia, PA-based toy marketer closed on the sale of $30 million of its convertible preferred stock to an investor group led by Hancock Park Associates and Kayne Anderson Capital Advisors.
The company also closed on $77 million in bank financing to be used to fund operations. This includes a $67 million revolving credit facility provided by a group of banks, led by Fleet Retail Finance Inc., and a $10 million term loan provided by Back Bay Capital Funding LLC.
First priority upon emerging from bankruptcy will be to get all FAO Schwarz, Zany Brainy and The Right Start stores back in stock on inventory. Since the bankruptcy filing in January, the company focused on reducing its overall level of inventory and liquidating old and discontinued inventory from stores.
Also as part of the reorganization plan, FAO declared a reverse split last week of its common stock with 15 existing shares combined into one new share. The move was one of the transactions contemplated by its bankruptcy reorganization plan.