(Bloomberg)—FTD Cos., the flower delivery mainstay that operates ProFlowers and FTD.com and No. 157 in the Internet Retailer 2019 Top 500, filed for bankruptcy protection in Delaware after a lackluster Valentine’s Day foiled efforts to find a buyer and repay debt.
FTD tried and failed to sell its entire business and instead will sell itself in pieces, it said in court documents on Monday. The company reached a deal to sell its restructured North American and Latin American businesses, including ProFlowers, to a Nexus Capital Management affiliate for $95 million, according to a court declaration by CEO Scott D. Levin.
It’s also selling its U.K.-based Interflora business to a subsidiary of The Wonderful Co. for $59.5 million. The company received letters of intent from strategic buyers for additional assets, Levin said.
FTD, which has 872 full- and part-time workers worldwide, listed assets and liabilities of as much as $500 million in its Chapter 11 petition early Monday. The company had faced a June 1 deadline to raise enough money to repay about $150 million of loans. It also had $72 million in unsecured trade debt at the time of filing,
The deep-rooted middleman for the florist industry traces its lineage to 1910, when it started as a network of U.S. florists who used telegraph communication to trade out-of-town orders, according to the court declaration. It operated as a not-for-profit until 1994, when it was acquired by Perry Capital Corp.
As the internet disrupted the industry, FTD purchased the parent of one of those chief disruptors, rival ProFlowers, for more than $400 million in 2014. But the company struggled to integrate the two businesses, and the $120 million of debt that it took on to fund the acquisition became increasingly burdensome.
Liquidity evaporated amid falling sales and an expensive turnaround attempt. Operating income from U.S. consumer segment fell $51 million, or 110%, between 2017 and 2018. The slumping profits caused the company to breach terms of its loans that limited debt relative to its cash flow. The struggles continued through the important Valentine’s Day holiday and lenders in March gave the company a June 1 deadline to find a way to repay its debt.
With the company under pressure, key vendors started raising concerns about FTD’s liquidity after its auditors expressed doubt about the company’s ability to remain as a going concern. After straining to appease those suppliers, ProFlowers and related units “significantly missed their 2019 Mother forecasts,” pushing the company into bankruptcy, Levin said in the declaration.
Jones Day is acting as legal adviser to the company, while Moelis & Co. and Piper Jaffray & Co. are serving as investment banker and financial adviser, according to a company statement. Alan Holtz of AlixPartners is FTD’s chief restructuring officer.